ThinkSmart sells off Australian operations

ThinkSmart shares have shot up 39 per cent upon its announced agreement to sell its Australian and New Zealand businesses to financial services company FlexiGroup for $43 million to shift focus to its operations in the UK.

RentSmart provides point of sale finance solutions with partnerships to retail giants such as JB Hi-Fi, Dick Smith Electronics and Officeworks.

"RentSmart ANZ provides access to new relationships, enhances our distribution channels and provides strong growth potential from selling FlexiGroup product into new retailers," FlexiGroup chief executive and managing director Tarek Robbiati said.

FlexiGroup will fund the acquisition with a combination of cash and debt facilities and has re-affirmed its market guidance for FY14 of $84-$86 million.

“Following a strategic review, the decision has been made to focus our resources on the expansion of our very successful UK operations,” ThinkSmart executive chairman Ned Montarello said.

“The UK, with 62 million consumers and a growing economy represents a highly attractive market for ThinkSmart both in terms of size and number of opportunities for which ThinkSmart is well positioned to address.”

Mr Montarello said the sale price represented an attractive return for the company for the Australian business equivalent to 26.5 cents per share and would bring a $16 million profit before tax on conclusion of the sale.

“To that end, the decision to sell the Australian business has been made to crystallise a return for our shareholders and generate funds to promote this expansion," he said.

“The board believes that this transaction is in the best interest for shareholders.”

Grant Samuel is acting as financial adviser to ThinkSmart and Herbert Smith Freehills is acting as legal adviser.

The company expects it will pay out 11 cents per share to shareholders with a fully franked special dividend of 3.6 cents per share and a capital return of 7.4 cents per share.

ThinkSmart’s board intends to implement an on-market share buyback of up to 10 per cent of the company’s issued capital over a period of six months from the completion of the sale.

Last month, ThinkSmart also announced the appointment of Keith Jones, an experienced executive with a strong UK and European retail background, as chief executive officer from February 2014.

Shares in ThinkSmart are trading up 39 per cent, up 11 cents to trade at 39 cents per share, as of 11.15am, WST.