MEXICO CITY - Grupo Elektra has agreed to acquire payday lender Advance America Cash Advance Centers Inc. for $655 million, stretching the low-income-loans empire of Mexican billionaire Ricardo Salinas into the United States.
Elektra, the retail and banking company 70 percent owned by Salinas, will pay $10.50 a share for Advance America, the Mexico City-based company said Wednesday. That's a 33 percent premium to Wednesday's closing stock price. Including debt, the transaction is valued at $780 million, Elektra said.
Salinas, 56, seeks to provide financial services to "the bottom of the pyramid" in the U.S., targeting households with less than $25,000 in annual income, he said in a November interview. In Latin America, Elektra offers loans of an average size of $400, a business that has helped make Salinas Mexico's fourth-richest man, with a net worth of $8.2 billion, according to Forbes magazine.
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"It's an opportunity for us to have a footprint in a market that is expanding," said Bruno Rangel, executive director of investor relations for Elektra. The acquisition, expected to close in the first half of this year, will boost sales and profits, he said.
Elektra operates in eight Latin American countries. Spartanburg, S.C.-based Advance America has 2,600 locations in 29 states, Britain and Canada, it said. Elektra will pay for the transaction with about $300 million in cash and the rest in debt, some of it yet to be issued, Rangel said.
The acquisition will once again put Salinas under the scrutiny of federal regulators. Payday lending is a focus for the newly created U.S. Consumer Financial Protection Bureau.
THE LOCAL ANGLE
There are several Advance America Cash Advance Centers in Tucson.