Cash Converters Acquires 29 Stores at 4.5x EBITDA, Eyes Earnings Boost
Cash Converters has completed a $37.1 million acquisition of 29 franchise stores across Australia’s East Coast, aiming to boost earnings and operational efficiency from year one.
- Acquisition of 29 franchise stores across Queensland, NSW, ACT, and Tasmania
- Deal valued at $37.1 million, representing 4.5 times FY25 EBITDA
- Expected to be earnings per share accretive in the first full year
- Funded through existing cash reserves and recent equity raise
- Strengthens corporate footprint and unlocks cross-sell and margin expansion opportunities
Strategic Expansion on the East Coast
Cash Converters International Limited (ASX, CCV) has taken a significant step in consolidating its presence across Australia's East Coast by completing the acquisition of 29 franchise stores for $37.1 million. These stores, operating under the Cash Converters Investment Group (CCIG), span Queensland, New South Wales, the Australian Capital Territory, and Tasmania, regions known for their robust consumer markets.
The acquisition, valued at a multiple of 4.5 times the forecast FY25 EBITDA, is expected to be accretive to earnings per share from the first full year post-completion. This move aligns with Cash Converters’ broader strategy to convert high-quality franchise stores into corporate-owned outlets, thereby enhancing operational control and consistency.
Operational and Financial Implications
By bringing these 29 stores under corporate ownership, Cash Converters aims to streamline customer experience, compliance, and store processes. The acquisition is anticipated to unlock new retail and lending cross-sell opportunities, supporting margin expansion through increased scale and efficiency. Additionally, the company expects to leverage stronger buying power and improved loan book funding capabilities across the expanded network.
Funding for the acquisition has been sourced from existing cash reserves and proceeds from a recent equity raise, reflecting a balanced approach to capital management without resorting to debt. This financial prudence may reassure investors about the company’s ability to integrate the new stores without undue strain on its balance sheet.
Network Growth and Future Prospects
Following this acquisition, Cash Converters now operates 122 corporate stores in Australia, with 29 franchise stores remaining. Internationally, the company maintains a significant presence in the United Kingdom, operating 60 corporate stores alongside 135 franchises. CEO Sam Budiselik highlighted the operational strength and experience the acquired stores bring, emphasizing the company’s commitment to further growth and operational improvements.
Looking ahead, the integration of these stores could serve as a catalyst for further consolidation in the franchise network, enhancing Cash Converters’ competitive positioning in key markets. The company’s focus on longer-term, lower-cost lending solutions and expansion into repurposed luxury goods retailing complements this acquisition, potentially driving sustainable growth.
Bottom Line?
This acquisition marks a pivotal step in Cash Converters’ consolidation strategy, setting the stage for enhanced earnings and operational scale on Australia’s East Coast.
Questions in the middle?
- How smoothly will Cash Converters integrate the acquired franchise stores operationally and culturally?
- What specific margin improvements and cost efficiencies can investors expect post-acquisition?
- Will Cash Converters pursue further acquisitions to consolidate remaining franchise stores or expand into new markets?
