Portfolio Recovery Expands into UK with $51 million ARM Acquisition

Debt buyer and accounts receivable management firm Portfolio Recovery Associates, Inc. (NASDAQ: PRAA) announced Monday that it has acquired Mackenzie Hall Holdings Ltd., a leading UK debt collection and purchase group.

Under the terms of the transaction, Portfolio Recovery Associates (PRA) purchased 100% of the equity interest in Mackenzie Hall for a maximum price of £33.5 million (approximately $51 million) in cash. PRA anticipates the acquisition will be immediately accretive to earnings, and it said it intends to discuss the acquisition further during its fourth quarter 2011 earnings call.

Based in Kilmarnock, Scotland, Mackenzie Hall offers outsourced and contingent consumer debt recovery on behalf of banks, credit providers and debt purchasers, as well as distressed and dormant niche portfolio purchasing. The company, founded in 2003, employs approximately 170 people at its headquarters and contact center in Kilmarnock.

“This acquisition expands PRA’s presence into new geographic markets, further diversifying our revenue and available service offerings,” said Steve Fredrickson, chairman, president and chief executive officer of PRA. “Our plan includes providing both expertise and capital to the Mackenzie Hall team, permitting them to accelerate their already impressive track record of growth and innovation. I’m proud to welcome all of Mackenzie Hall’s employees to the PRA team.”

Paul Mackenzie, chief executive of Mackenzie Hall Holdings Ltd., welcomed the acquisition, stressing that PRA’s investment would ensure continuity and financial strength. “This deal confirms Mackenzie Hall’s position as the UK’s most exciting and progressive consumer debt collection and debt purchase agency,” he said. “It provides us with unparalleled support in our pursuit of accelerated growth, both in our core contingent collections service, which remains at the heart of the business, and in our ongoing purchase of niche portfolios.”

Mackenzie and his executive management team have entered into long-term employment agreements with PRA.

“This is an interesting transaction that we believe represents a growing trend among large U.S. based debt purchasing and ARM companies seeking expansion opportunities in other geographic markets,” noted Mark Russell, director of ARM advisory firm Kaulkin Ginsberg. “PRA is in an enviable position to leverage its strong Balance Sheet and stock performance to execute on attractive acquisition opportunities. We believe this transaction will be followed by other international transactions led by large U.S. players later this year.”