Debt buyer Portfolio Recovery Associates (PRA) Inc. announced Wednesday it has agreed to acquire Aktiv Kapital AS, an Oslo Norway-based accounts receivable management company in one of the largest deals in accounts receivable management history.
Terms of the approximately $880 million acquisition also require PRA to assume approximately $435 million of its corporate debt, putting the total enterprise value for the deal at $1.3 billion.
The two companies combined will become one of the world's largest acquirers of non-performing consumer debt from banks and other creditors, with more than $4.6 billion in estimated remaining collections from customers.
Aktiv Kapital specializes in buying and servicing non-performing loans in Europe and Canada. PRA, based in Norfolk, Va., operates in the U.S. and U.K.
Aktiv Kapital will provide PRA immediate access to sellers of consumer debt in new markets beyond the U.S. and the U.K., and a platform for growing investment in and servicing of consumer debt across Europe, PRA officials said Wednesday.
"In Aktiv Kapital, PRA has found a true partner, an international acquirer of consumer debt with a conservative balance sheet, a deep and diverse data set and remarkable analytical and operating capabilities. With Aktiv Kapital further diversifying our portfolio, PRA expects to meet or exceed our twin goals of 20% ROE and 15% EPS growth, delivering long-term shareholder value through the years ahead," said Steve Fredrickson, PRA's chairman, president and CEO.
PRA expects to finance the deal with a combination of cash; $170 million of seller financing; the $435 million from PRA's domestic, revolving credit facility; and by accessing an accordion feature on its credit facility of up to $214 million. PRA may choose to use other debt instruments to expand, replace or pay down any of these financing options, company officials said.
Aktiv Kapital also will bring to PRA "proven leadership experience and success in markets across Europe," said Fredrickson, as Aktiv Kapital's CEO Geir Olsen, his executive team and the more than 400 Aktiv Kapital employees will join PRA upon the close of the transaction.
PRA anticipates expenses related to the transaction totaling approximately $15 million over the first two quarters of this year. The transaction is expected to close in the second quarter.
Until then, both PRA and Aktiv Kapital will continue to source and purchase consumer debt as stand-alone companies in their respective markets, while servicing customers ready to pay back their debt.
Earlier this month, PRA announced the acquisition of certain operating assets from Pamplona Capital Management LLP, an investment manager that provides alternative investment platforms across private equity and single manager hedge fund investments