First Cash Said to Be in Advanced Merger Talks With Cash America

  • An agreement could be announced as soon as this week
  • Deal would bring together two of the largest U.S. pawn shops

First Cash Financial Services Inc. is in advanced talks to merge with Cash America International Inc., people with knowledge of the matter said, in a deal that would bring together two of the largest retail pawn shop operators in the U.S.

The companies are discussing an all-stock merger of equals and an agreement could be announced as soon as this week, said the people, who asked not to be identified because the information is private. A transaction hasn’t been finalized and talks could still fall apart, the people said.

First Cash Financial, based in Arlington, Texas, has a market value of about $1.4 billion, while Fort Worth, Texas-based Cash America is valued at about $987 million.

Representatives for Cash America and First Cash didn’t immediately respond to requests for comment.

A combination would create a new powerhouse in the non-bank lending market, a catchall term for pawn brokers, check-cashing companies, payday lenders and others that provide small-dollar loans to people that live paycheck to paycheck. It’s a highly fragmented market, catering to the estimated 50 million people in the U.S. that don’t do business with traditional banks.

It would also shore up First Cash’s position in the U.S., giving it more scale to better compete against rival pawn shop operator Ezcorp Inc. and other non-bank lenders such as World Acceptance Corp. and OneMain Holdings Inc

Payday Crackdown

There’s been a a regulatory crackdown in the past year on payday loans -- small, high-interest cash advances to people with poor credit who repay the money when they get paid. 

Cash America and First Cash both have retreated from payday lending to focus on pawnbroking, a steadier, lower-growth business that involves lending against jewelry and other valuables. Pawn shops will be exempt from new payday-lending restrictions the Consumer Financial Protection Bureau will unveil this spring.

Cash America is the largest pawn shop operator in the U.S., with more than 800 pawn stores in 20 states. It controls more than 14 percent of the U.S. pawn shop market, according to a report last year from Tulane University’s A.B. Freeman School of Business.

First Cash is the No. 3 U.S. player, with more than 300 locations stateside and another 700 in Guatemala and Mexico, where it makes most of its money. It controls close to 5 percent of the U.S. pawn market.

Before it's here, it's on the Bloomberg Terminal.