Pawnbroker-to-jewellery retailer H&T (HAT:AIM) looks set to become the latest British growth company to leave the stock market after recommending a £297 million takeover offer from US peer FirstCash (FCFS:NASDAQ).

Shares in the Sutton-headquartered pawn shops operator shot up 40% to 640p on news of the deal, pitched at 661p per share or a 44% premium to the latest closing price, a combination that will create the largest publicly-traded pawn platform in the US, Latin America and the UK.

News of the takeover also boosted shares in H&T’s smaller UK rival Ramsdens (RFX:AIM), which firmed 5.4% to 295p as investors wagered it too could be on the radar of predators.

WHY H&T DREW A BID

Shares flagged the investment attractions of the UK’s biggest pawnbroker in October 2024, noting the cost-of-living crisis had turbo-charged growth in H&T’s core pawnbroking business, as well as the boost from a soaring gold price and the company’s multiple levers for long-term growth.

Guided by CEO Chris Gillespie, H&T has ‘unanimously’ recommended the near-£300 million offer from FirstCash, which they argue provides shareholders with the opportunity to realise the value of their holdings in cash at ‘a significant premium to the prevailing share price, at a higher level than the H&T shares have ever traded on AIM’.

Shareholders will receive 650p in cash as well as the 11p final dividend, due to be paid on 27 June.

H&T explained it had received and rejected multiple proposals from FirstCash since December last year, eventually engaging in negotiations after a fourth offer arrived at a ‘meaningful’ increase in value.

While the board remains confident in H&T’s ability to grow as a standalone, it acknowledged the risks associated with executing on its strategy, as well as the potential for a plunge in the gold price from historic highs and the scope for additional cost pressures coming down the tracks.

‘The support and backing of a large, well-resourced and well-capitalised, international platform significantly improves the strategic positioning of H&T in its marketplace’, insisted the company.

FIRSTCASH ON FRONT FOOT

As for NASDAQ-listed FirstCash, a $5.8 billion cap with a track record of successfully expanding in US and Latin American markets, having opened or acquired 1,365 pawn stores since 2017, it sees H&T as a compelling opportunity to expand its operations into the UK.

The Texas-headquartered company’s CEO Rick Wessel commented: ‘We are excited to add H&T, the leading pawn operator in the United Kingdom, as part of FirstCash’s global platform. This strategic transaction provides an entry into a significant new market, which we believe will unlock additional growth opportunities for FirstCash.’

Wessel added: ‘We have great confidence in H&T’s continued success, given their proven track record, coupled with their experienced management and operations team.’

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