Digital Payments Fintech News

FirstCash to Acquire American First Finance, a Leading Technology-Driven Virtual Lease-to-Own and Retail Finance Platform for Underserved Customers

FirstCash to Acquire American First Finance, a Leading Technology-Driven Virtual Lease-to-Own and Retail Finance Platform for Underserved Customers

Establishes FirstCash’s Entry into Large and Growing Point-of-Sale Payments Market

Provides Significant Revenue and Earnings Growth Opportunity

$1.17 Billion Stock and Cash Transaction Expected to be Significantly Accretive to EBITDA and EPS

Companies to Host Conference Call Today at 8:30 a.m. ET / 7:30 a.m. CT

FirstCash, Inc., the leading international operator of over 2,800 retail pawn stores in the U.S. and Latin America, announced that it has entered into a definitive agreement to acquire American First Finance, Inc. (“American First Finance” or “AFF”), a rapidly growing, technology-driven virtual lease-to-own (“LTO”) and retail finance provider focused on underserved, non-prime customers. Under the terms of the agreement, the total consideration payable at closing is valued at approximately $1.17 billion, based on FirstCash’s closing stock price on October 26, 2021, consisting of approximately 8.05 million shares of common stock and $406 million in cash, subject to a net debt adjustment. Up to an additional $300 million of consideration is payable in the event AFF achieves certain performance targets through the first half of 2023.

The addition of American First Finance launches FirstCash into the large and growing point-of-sale (“POS”) and buy now pay later payment space, which is estimated to have a $600 billion total addressable market1. AFF is the fourth largest provider of POS payment solutions to underserved retail customers in the U.S. with significant scale. AFF serves customers through its differentiated omnichannel strategy, utilizing sophisticated underwriting models and its e-commerce capabilities.

Rick Wessel, FirstCash Chief Executive Officer and Vice-Chairman of the Board stated, “Since our founding more than 30 years ago and through the merger of First Cash and Cash America in 2016, we have successfully executed on our growth strategy and established FirstCash as a leading retailer and provider of financial services to underserved consumers, while delivering significant value to shareholders. Building on the complementary strengths of FirstCash and American First Finance, this transaction diversifies us beyond our core pawn business with the addition of a fast-growing segment that significantly expands our customer base and introduces a scalable, technology-driven product set into our organization.”


Mr. Wessel continued, “With the tremendous growth in the retail POS finance and buy now pay later space, AFF is an ideal partner for FirstCash, bringing a highly profitable and scaled platform with industry leading LTO and retail finance capabilities, a large and highly reputable merchant base and an experienced management team. Working with American First Finance, we believe we are well positioned to drive further expansion in this large and growing addressable market. In addition, we believe there are opportunities to utilize American First Finance’s platform to bring flexible payment options to our pawn stores to drive even faster inventory turns and supplement our existing retail layaway product. We are excited to welcome AFF’s talented team and look forward to the opportunities ahead to serve more customers than ever.”

Doug Rippel, Chairman and Founder of American First Finance stated, “When I founded AFF in 2013, I set out to provide millions of consumers without pristine credit with flexible payment solutions to acquire durable goods and services, and I am incredibly proud of what we’ve built. FirstCash shares our vision of providing retail financing alternatives to underserved customers, and with its strong operational track record, we are confident that AFF will be even better positioned to grow its customer and merchant base and continue supporting their needs. I look forward to being a significant shareholder and joining the FirstCash Board of Directors to help guide our combined company going forward.”

Compelling Strategic and Financial Benefits

  • Facilitates FirstCash’s Entrance into Large and Growing POS Payments Market. Today, retail POS financing is one of the fastest growing portions of the financial services sector. FirstCash has a proven track record in retail-based operations focused on underserved consumers, and through this transaction with AFF, will become a leader in the highly complementary POS payments space focused on similar customers. Today, AFF supports a nationwide network of more than 6,500 active merchant partner stores and e-commerce platforms, generating growth opportunities and incremental sales to consumers who would not have qualified for financing offers typically provided by these merchants. It has established significant presence with merchant partners focused on furniture and mattresses, appliances, jewelry, electronics and automotive products and repair services, among others. AFF has seen rapid growth in its invoice volume with merchant partners, growing from less than $350 million in 2019 to an estimated $800 million in 2021.
  • Expanded Product Offerings Enhancing FirstCash’s Core Pawn Business. With AFF, FirstCash can provide flexible payment options to retail customers in its pawn locations which will provide a new source of revenue. Specifically, AFF’s LTO platform will enhance options for customers beyond FirstCash’s existing layaway program by allowing them to take home leased merchandise immediately. Over the longer term, FirstCash expects to explore opportunities for potential LTO and retail finance products in Latin America. Additionally, for all AFF LTO customers who wish to return leased merchandise, FirstCash can accept these items at one of its 1,087 U.S. pawn locations across 25 states and the District of Columbia.
  • Leverages Integrated Technology, Data, e-Commerce and Mobile Capabilities to Accelerate Omnichannel Strategy. AFF’s fully integrated technology platform is easily incorporated into its merchant partners’ systems in-cart checkout platforms and more broadly online as well as for mobile devices. With the addition of AFF’s enhanced technology, data and e-commerce capabilities, FirstCash will be well positioned to capitalize on growth opportunities in both existing and new product and service categories. In addition, AFF will also support FirstCash’s efforts to integrate digital payment options for pawn customers to provide greater convenience and operational efficiencies.
  • Provides Significant Revenue and Earnings Growth Opportunity. AFF generated revenues of approximately $350 million in 2020 with estimated revenues of over $600 million and over $800 million in 2021 and 2022, respectively. AFF projects adjusted EBITDA for 2022 between $120 million and $140 million.
  • Creates Opportunity for Immediate Adjusted EPS and Adjusted EBITDA Accretion. The transaction is expected to be approximately 15% accretive to adjusted earnings per share in 2022, with further accretion expected in 20232. Adjusted EBITDA accretion is projected to be approximately 30% in 2022.
  • Generates Strong Cash Flow to Support Balanced Capital Allocation Plans, Including Shareholder Returns. FirstCash expects to continue generating significant free cash flows and will remain focused on long-term shareholder returns through further investment in its core domestic and international pawn business, while also accelerating AFF’s growth. FirstCash expects to maintain its current dividend policy and to opportunistically repurchase shares under its existing authorization. FirstCash remains committed to maintaining a solid balance sheet and its strong and stable credit ratings.

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Terms of Acquisition and New Parent Company Formation

Under the terms of the agreement, FirstCash will acquire 100% of the outstanding equity interests of American First Finance, for a consideration at closing consisting of approximately 8.05 million shares of common stock and $406 million in cash, subject to adjustment for AFF’s net debt at closing and certain other items. In addition to the closing purchase price, as noted above, the seller has the potential to receive up to an additional $300 million pursuant to an earnout if AFF meets certain adjusted EBITDA targets through the first half of 2023.

As part of the transaction, FirstCash will form a new parent company, which will assume FirstCash’s listing on the Nasdaq and maintain the “FCFS” ticker symbol. At closing, the existing shares of FirstCash stock will automatically convert on a one-for-one basis into shares of common stock of the new FirstCash parent company. Upon completion of the transaction, Mr. Rippel and his affiliates will control approximately 16.6% of the outstanding shares of the new FirstCash parent company and existing FirstCash shareholders will control the remaining 83.4%. At closing, Mr. Rippel will also be appointed to the Board of Directors of the new FirstCash parent company.

Following the close of the transaction, AFF will operate as a separate Dallas-based business unit within FirstCash led by Howard Hambleton, AFF’s President and Chief Executive Officer, and the rest of its current management team.

The transaction has been unanimously approved by FirstCash’s Board of Directors and is expected to close in late 2021 or early first quarter of 2022, subject to the satisfaction of customary closing conditions and receipt of regulatory approvals, including antitrust approvals.

The cash portion of the transaction will be funded through a combination of cash on hand and debt financing.

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