Pawnbrokers holding merger talks

Two leading pawnbrokers are holding merger talks, it is reported

The UK's two stock-market listed pawnbrokers are holding merger talks that could lead to the creation of a pawnbroking giant, it has been reported.

Talks between Albemarle & Bond (A&B) and H&T are said to be at an early stage and no advisers have yet been appointed.

But if a tie-up does go ahead, it would create the UK's largest pawnbroking business business, valued at more than £230 million, with 252 outlets, including planned store openings.

A merger would need the backing of shareholders and both of the firms' boards.

H&T's largest shareholder is fund manager Artemis Investment Management, which has a 16.1% stake in the group, while its directors own 3.9% of the company.

The biggest shareholder in A&B is US pawnbroking giant Ezcorp, which has a 29% holding, with the group's management accounting for just under 10% of shares.

Both companies have enjoyed rapid growth since the economic downturn struck, benefiting from a combination of rising numbers of people who are unable to access credit elsewhere and steep increases in the price of gold.

While the groups declined to comment on the merger talks, A&B's new chief executive Barry Stevenson told the Mail on Sunday that market conditions were good for consolidation, while his company was well financed to handle a sizeable acquisition.

He said: "We are always on the lookout for an acquisition that fits in with our rollout programme."

A&B reported a 42% jump in annual profits in September following the introduction of a gold purchasing service across its 115 outlets in February this year, which contributed £1.4 million to the group's profits.