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Latin America would be growth target for First Cash/Cash America combination

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Latin America would be growth target for First Cash/Cash America combination

and see a promising growth runway as a combinedcompany with a lift from business south of the border.

On a pro forma basis, 45% of the new company's store count wouldbe in Latin America, and the region will be the primary growth area for it, FirstCash Chairman and CEO Rick Wessel said during an April 28 conference call to discussthe merger agreement.

First Cash expects to deploy its 6,500-person workforce in Mexicothat the company has developed for 15 years, Wessel said, according to a of the call.

"[We] have a lot of people that are very anxious to moveto other markets and expand the First Cash brand to other countries," he said.The new company, which is expected to go by FirstCash, should have growth potentialin store openings and acquisitions, Wessel said. Besides Mexico, First Cash hasoperations in Guatemala and El Salvador. Colombia and Peru are the top targets forbusiness locations, he said.

Moody's and S&P Global Ratings both affirmedtheir issuer credit ratings for First Cash after the deal announcement, with eachagency citing the lack of extra leverage needed for the transaction. Moody's alsonoted First Cash's winning track record in acquiring and integrating other pawnstores.

The company offloaded several payday loan businesses in salesfrom 2008 through 2011 and has since been an active acquirer in the pawn lendingspace. First Cash purchased stores individually and in bunches, including 12 fromJoLin Enterprisesin 2013 and 15 shops from an investorgroup in 2014. That year, First Cash in separate dealswith Cash America acquiredfive Colorado shops and CAMexHolding LLC, a company that brought with it 47 pawn lending stores inMexico.

In February, First Cash acquired 211 pawnstores in Latin America, including 166 in Mexico.

Cash America has not been as acquisitive in recent years. In2012, the company's purchases included 25 pawnshops from Pyramid Pawn & Sales. The company followedthat acquisition with a 2013 buyoutof 34 lending sites from PawnMart Inc., a subsidiary of Xponential Inc.

In the U.S., the companies' businesses have little geographicoverlap, Cash America President and CEO T. Brent Stuart said on the merger call.Cash America does a good deal of business in Las Vegas and the states of Arizona,Florida, Louisiana and Washington, locations in which First Cash has no stores orhad targeted for growth, he said. First Cash has significant operations in the Mid-Atlanticand Colorado, areas in which Cash America's business is sparse, Stuart said.

"This basically picks up 12 new states for First Cash, andit picks up six new states for Cash America," he said.

U.S. growth for the combined company is expected to come fromtargeted local expansions and smaller fill-in acquisitions where the company thinksit makes sense, Wessel said.

The press releaseon the merger anticipated $50 million in annual run-rate synergies from the deal.Asked during the call about the savings, executives from the two companies citedpurchase accounting and the consolidation of their point-of-sale systems that wouldsunset Cash America's platform.

The new company headquarters would be at the Cash America basein Fort Worth, Texas.

S&P Global Ratingsand S&P Global Market Intelligence are owned by S&P Global Inc.

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