Debt buyer Encore Capital Group Inc. (NASDAQ: ECPG) announced Wednesday it is acquiring debt buyer Asset Acceptance Capital Corp. (NASDAQ: AACC) in a deal valued at $200 million.
San Diego-based Encore said in a statement that the combined company will have purchased more than 60 million individual consumer accounts, including credit card, telecommunications, consumer loans and other related assets, with a face value of over $130 billion.
Encore has been growing by buying loan portfolios from competitors, with two big transactions last year. Buying Asset Acceptance could also help it cut costs, Encore officials said.
Shareholders for Asset Acceptance, based in Warren, Mich., will be able to choose between taking cash or the equivalent amount of stock in Encore. Asset Acceptance will continue to operate under that name as a separate arm of Encore.
Assuming the deal is approved by regulators and Asset Acceptance shareholders, it's expected to close by the end of June.
“This acquisition moves our industry into a new phase of maturity defined by more efficient companies that are committed to operating ethically and treating consumers with respect,” said Encore’s president and CEO Brandon Black. “Encore’s strong operating and cost advantages will allow Asset Acceptance’s investments to be significantly more profitable and will deliver greater value to shareholders.
“Our industry is highly fragmented, and we have long been anticipating consolidation as the regulatory and business climate grows more complex,” he continued. “This transaction clearly signals that Encore will play a key role in driving this phase in our industry’s development."
Adds Rion Needs, president and CEO of Asset Acceptance, “We believe Encore is a strong strategic fit for Asset as the transaction will enable us to maximize the full value of both our investments and our talented workforce. The combination of our two companies will better position us for success in a rapidly changing and competitive marketplace.
Last week, a federal appeals court voided a $5.2 million settlement intended to resolve allegations that Encore Capital used false affidavits and other illegal tactics to collect debts from 1.44 million consumers. The 6th Circuit returned the case to the district court for further proceedings.