U.S. debt buyer Encore Capital Group, Inc. (NASDAQ: ECPG) announced today that it will acquire UK-based debt buyer Marlin Financial Services for £295 million (approximately $481 million) through Cabot Credit Management, a UK subsidiary of Encore acquired last year. Marlin will integrate into Cabot and the deal is being financed with debt taken on by Cabot.
Cabot’s acquisition of Marlin expands Encore’s presence in the high-growth U.K. and Irish markets, which together comprise the largest mature credit market in the world after the U.S. Together the two companies will create the largest unsecured debt buyer in the U.K., and the companies expect to generate substantial synergies that will drive profit growth in the near term, with future upside potential. The transaction is expected to be accretive to Encore’s 2014 earnings per share.
According to Ken Vecchione, Chief Executive Officer of Encore, the acquisition sends a clear signal that Encore will continue its purposeful expansion in order to capitalize on growth and consolidation opportunities both domestically and internationally. “As we have said before, our goal is to consistently deliver 15 percent growth in earnings per share. We plan to achieve this by focusing on three key areas: growing our existing businesses, including Propel and Cabot, expanding into new geographies, and diversifying into new asset classes. Cabot’s acquisition of Marlin aligns perfectly with this strategy.”
Marlin was founded in 2002 by Irish entrepreneur Martin Dunphy. In 2010, he partnered with mid-market private equity firm Duke Street who acquired a 58 percent stake in Marlin and invested in the company. He remained as the company’s Group Chief Executive until July 2013 when he became non-executive Deputy Chairman to facilitate a complete exit from the business.
Dunphy sold his stake in Marlin Monday, as did Duke Street.
“I am delighted that Marlin is going to a good home,” said Dunphy. “The company continues to be a key part of the UK’s credit value chain, helping both banks to free up capital and people to take responsible action to return to creditworthiness.”
Encore announced that as part of the agreement, Ken Stannard, Marlin’s chief executive officer, has been appointed chief executive officer of Cabot, with Neil Clyne, Cabot’s current chief executive officer, stepping down to pursue other interests.