Carfinco Expands Into US Market With New Acquisition
Edmonton, Alberta-based Carfinco Financial Group Inc. revealed this week it is expanding into the U.S. market with a new acquisition.
The company has purchased Massachusetts-based Persian Acceptance Corp. (PAC), an indirect lender in the subprime retail automotive industry, from Peter and Jennifer Miller.
Key members of PAC management will remain in place under the continuing leadership of founder and president Peter Miller, officials explained, and PAC will operate as a subsidiary of the Carfinco.
The acquisition was closed on Sept. 4.
PAC, which is headquartered in Wakefield, Mass., was established in 1998 and is licensed and generates receivables in Massachusetts, New Hampshire, Maine, Connecticut and Vermont. It currently has an active base of 362 dealers who source vehicle sales finance contracts for PAC.
PAC currently has $42.7 million in finance receivables.
Commenting on the news, Tracy Graf, chief executive officer of Carfinco, said, "We view this as an excellent opportunity for Carfinco, as Peter and Jennifer have built a very successful company that meets the criteria we were looking for in terms of an expansion into the US market.
"We believe the acquisition adds value to our shareholders. Importantly, PAC's growth strategy mirrors Carfinco's, by increasing loan originations and earnings in a controlled and structured manner,” Graf continued.
Terms of the deal were based on a combination of PAC's book value and historical earnings, officials said, and the total consideration was $9.5 million (USD) comprised of $9 million cash and $500,000 in common shares of the Carfinco (55,223 common shares of Carfinco, priced at $9.45 (CDN) per share after exchange rate adjustments).
“The vendors (Peter and Jennifer Miller) may earn up to $2 million (USD) in additional consideration contingent upon PAC reaching performance targets over the next two years,” the company said.
PAC’s Peter Miller also commented on the deal, noting, "Jennifer and I are thrilled to be joining forces with Tracy and Troy Graf and the entire Carfinco organization. Combining the individual strengths and synergies of both companies will provide a unique opportunity for PAC to become a major player in the U.S. sub-prime auto finance market.”