United Companies Financial Corp., Baton Rouge, La., said it has signed a letter of intent to acquire Empire Funding Corp.
Empire, an Austin, Tex., home improvement lender, originated $256 million of loans in the year ended Sept. 30.
United Companies, a leading home equity lender, will exchange 2.6 million shares of its stock, currently valued at about $89 million, for the Texas company. The transaction is expected to close late this year.
The purchase will be nondilutive to United Companies' earnings, said John Hess, an investor relations executive.
Empire Funding operates in 46 states through 16 branch offices and 180 correspondents. The company is listed as one of the top five originators of FHA Title I and conventional home improvement loans in the country.
United Companies plans to securitize Empire Funding loans, Mr. Hess said.
The home improvement lender will retain its name and continue to operate under the leadership of chairman James Isaacs.
Although Empire had been approached by other companies, it picked United because "they felt like the best fit," Mr. Isaacs said. United Companies' large branch network and capital availability were especially attractive, he said.
