Pawnbrokers lending their ears to merger talks to create £230m firm

Published on Sunday 1 November 2009 19:18

BRITAIN'S two stock market-listed pawnbrokers are holding merger talks that could lead to the creation of a pawnbroking business valued at more than £230 million, it was reported yesterday.

Talks between Albemarle & Bond (A&B) and H&T are said to be at an early stage and no advisers have yet been appointed.

But if a tie-up does go ahead, it would create the UK's largest pawnbroking company with some 250 branches, including planned store openings.

Any merger would require the backing of shareholders and both of the firms' boards.

H&T's largest shareholder is fund manager Artemis Investment Management, which has a 16.1 per cent holding in the group, while its directors own just under 4 per cent of the company.

The biggest shareholder in A&B is US pawnbroking giant Ezcorp, which has a 29 per cent stake, with the group's management accounting for nearly 10 per cent of the stock.

Both companies have enjoyed rapid growth since the downturn kicked in, benefiting from a combination of rising numbers of people who are unable to access credit elsewhere and steep increases in the price of gold.

The firms declined to comment on the reports of merger talks. However, A&B's new chief executive, Barry Stevenson, has described market conditions as being good for consolidation, stressing that his company was well financed to handle a sizeable acquisition.

He said: "We are always on the lookout for an acquisition that fits in with our roll-out programme."

H&T chief executive John Nichols and A&B operations director David Page both sit on the board of the National Pawnbrokers Association.

Reiterating his firm's acquisition plans, Nichols said: "We plan to open a further 12 pawnbroking stores this year, bringing out total to 122. We also have 57 gold stores and we are looking to increase this to 77 this year."

In September, A&B reported a 42 per cent leap in annual profits following the introduction of a gold purchasing service across its 115 outlets in February this year, which contributed 1.4m to the group's profits.

Overall pre-tax profits jumped from 10.3m to 14.6m in the 12 months to the end of June, with the group saying trading had continued "positively" into the new financial year.

A&B was founded in Bristol in 1983, but is now based in Reading. It has grown through acquisitions, buying businesses in North Wales and London, and it expects to open up to 15 more stores this year.

H&T has 114 outlets across the UK, offering pawnbroking, second-hand jewellery sales, cheque cashing, payday advances and unsecured loans.