UPDATE 1-Debt collector Portfolio Recovery to buy Aktiv Kapital for $880 mln

Wed Feb 19, 2014 5:54pm EST

Feb 19 (Reuters) - U.S.-based Portfolio Recovery Associates Inc, which provides fee-based debt collection services, said it would buy Norway's Aktiv Kapital AS for about $880 million to expand its debt collection services in Europe.

Portfolio Recovery's shares rose 5 percent in extended trading after the company also reported a higher-than-expected rise in fourth quarter profit.

The combined entity will be 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, Portfolio Recovery said in a statement.

The company, which estimated $2.7 billion in remaining collections from its customers in 2013, said it would also assume Aktiv's debt of $435 million, giving the deal an enterprise value of $1.3 billion.

Portfolio Recovery said it would finance the deal with a combination of cash, $170 million of seller financing and $649 million from its credit facility.

The company said it expected the deal to immediately add to earnings and estimated cost totaling about $15 million over the first and second quarter.

Aktiv's Chief Executive Geir Olsen and the more than 400 of the company's employees will join Portfolio Recovery when the deal closes, which is expected in second quarter.

Net income attributable to Portfolio Recovery rose 28 percent to $45.8 million, or 91 cents per share, in the quarter ended Dec. 31.

That was higher than the 90 cents per share analysts' on average were expecting the company to earn, according to Thomson Reuters I/B/E/S.

Cash collections rose 22 percent to $278.9 million in the quarter, while total revenue rose 20 percent to $184.9 million.

Deutsche Bank Securities Inc acted as adviser to Portfolio Recovery while William Blair advised Aktiv Kapital.

Portfolio Recovery shares were trading at $53.00 in extended trading after closing at $50.48 Wednesday on the Nasdaq.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.