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PaydayUK To Be Acquired By U.S. Payday Loan Company For £124 million

by Jim ONeil on January 12, 2011

in Payday Loans News

Payday loans are popular in many countries due to their ability to provide consumers with fast access to cash. PaydayUK is a popular online payday loan company owned by Purpose UK Holdings Ltd. The UK subsidiary of U.S.-based Dollar Financial Corp. is purchasing PaydayUK for £124 million.

Currently, Dollar Financial operates 300 stores within the UK, all company-owned. This acquisition will enable it to further consolidate its operations. The U.S. has recently enacted legislation that caps payday loan interest rates. This has caused many companies to expand their business outside the U.S. borders to countries like Mexico and the UK.

According to a statement made by PaydayUK, the deal should be finalized within 90 days, subject to regulatory approval. The acquisition should be reflected in the current quarter financial statements of Dollar Financial. It is anticipated that the deal will immediately add to earnings. When news of this acquisition was released, shares of Dollar Financial rose 23 cents to $28.63.

Since the Berwyn, Pennsylvania-based company’s first quarter results were declared, shares have increased 21 percent. It is unknown how the acquisition will affect operations of PaydayUK in terms of

management structure and staffing. Payday UK began operating in 2003 and issues UK payday loans by telephone and over the Internet. Dollar Financial operates over 350 stores in the UK that cash checks, buy gold, pawn loans, and issue short-term loans to consumers.

This deal is the latest of ongoing changes within the payday loan industry. Dollar Financial reported that many of its customers do not have banking services, which makes them prime candidates for payday loans. Consumers who take out payday loans have cash funded quickly to their accounts and are required to repay the money by their next payday, making these loans a convenient solution to short-term cash flow issues.

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