Mexican Firm To Acquire Spartanburg-based Payday Lender
A Mexican retail and financial services giant says it will purchase Spartanburg-based Advance America in a deal valued at $780 million. That's a 33 percent premium on Advance America's closing stock price Wednesday. Grupo Elektra is the name of Advance America's would-be owner. It's run by one of Mexico's wealthiest men and is big in Latin America. "Grupo Elektra is kind of an odd formula for some people to digest," admits company spokesman Dan McCosh. "You can kind of think of it as a Wal-Mart without food or a Sears without clothing - with a bank inside." At a Grupo Elektra store you can buy a dishwasher, TV, motorocyle - to name just a few of the offerings. Visit one of the company's bank outlets to open a no-fee savings account or take out a micro-loan. "We target what we call the bottom of the pyramid," says McCosh. For example, people who've never had a bank account and typically can't qualify for a long-term loan, but still need cash to make ends meet or keep a small business afloat. Companies that offer short-term, high-interest loans in the U.S. also appeal to that demographic, so Advance America - with its 2,600 offices in 29 states - is an attractive acquisition for Grupo Elektra. The sale is expected to close by July. Advance America's headquarters will remain in Spartanburg and spokesman Jamie Fulmer says the company's customers will likely have access to new products and services. "There's just a wealth of additional resources that Grupo Elektra brings to the table that will help us grow our outreach into the communities that we serve already," says Fulmer. Payday lenders in the U.S. have done well during the economic downturn, attracting customers in need of quick cash and increasingly unhappy with fees banks charge.