Shares in Ramsdens have surged more than 30% following the announcement that the Stockton-based pawnbroker and jewellery retailer is to be acquired by US rival FirstCash in a deal worth £206m. The acquisition, which values the entire share capital at about £206m including dividends, will see shareholders receive up to 609p per share – a 35% premium to the latest closing price.
Ramsdens' Growth Journey
Launched from a single store 39 years ago, Ramsdens now operates 175 shops across the UK alongside a thriving online presence. Its business streams include jewellery retail, precious metals, travel money, and pawnbroking. The company listed on the Alternative Investment Market (AIM) in February 2017 and has since added 50 stores, created over 300 jobs, and significantly grown profit before tax.
CEO Peter Kenyon expressed pride in the group's transformational growth since its IPO. "Less than a decade on, we have added 50 Ramsdens stores to the UK high street, created over 300 jobs and significantly grown our profit before tax," he said. He highlighted confidence in further growth opportunities and noted that FirstCash is an internationally established sector leader.
FirstCash's Strategic Move
FirstCash, an international pawnbroking operator with around 3,300 sites across the US, South America, and the UK, entered the UK market last year through its acquisition of H&T. The company is listed on the US Nasdaq stock market. Acquiring Ramsdens' stores will help FirstCash grow its UK business, particularly in the North and Scotland. Cost savings are expected from combining some head office and administrative functions.
Rick Wessel, CEO and Vice-Chairman of the Board of FirstCash, said: "We are excited to add Ramsdens, as part of the global FirstCash family. This transaction demonstrates our continued execution of FirstCash’s long-term growth strategy for expanding operations in each of our key markets."
Gold Price Boost and Acquisition Rationale
Ramsdens has benefited from the rising price of gold this year, which encouraged more customers to sell unwanted jewellery, boosting profits. However, the volatility of gold prices means performance could weaken in the future. The acquisition provides a safety measure for shareholders, according to the business.
Simon Herrick, non-executive chair of Ramsdens, noted that the share price had not fully kept pace with profit growth. "Unfortunately, the share price has not fully kept pace with the group’s positive profit and earnings per share growth and FirstCash has made a cash offer for the group which represents a 35% premium to the current share price," he said. The board, following independent advice from Cavendish, considers the acquisition recommendable to shareholders.
Market Reaction
By late morning, Ramsdens' share price stood at 591.8p, a rise of 30.8% on the day. The deal is expected to complete later this year, subject to shareholder and regulatory approvals.
