Become a Member
  • Track your favourite stocks
  • Create & monitor portfolios
  • Daily portfolio value
Sign Up
Quickpicks
Add shares to your
quickpicks to
display them here!

HSBC to Acquire Metris Inc.

4th Aug 2005 13:09

HSBC Holdings PLC04 August 2005 HSBC FINANCE CORPORATION TO ACQUIRE METRIS COMPANIES INC. HSBC Finance Corporation (HSBC Finance) and Metris Companies Inc. (NYSE: MXT)have entered into a definitive agreement for HSBC Finance to acquire Metris inan all-cash transaction which values Metris at US$1.594 billion. Uponcompletion, Metris will become a wholly-owned subsidiary of HSBC Finance. HSBC Finance, headquartered in Prospect Heights, Illinois, through itssubsidiaries and affiliates, is the sixth largest issuer of MasterCard and Visacards in the nation. Metris, with headquarters in Minnetonka, Minnesota andoffices in five states, is the 11th largest issuer of MasterCard and Visa cardsin the United States with managed receivables of approximately US$5.9 billion.Metris primarily serves the near-prime credit card market through direct mailand partnership affiliations. "HSBC Finance is a major provider of near-prime consumer finance credit in theUnited States and this acquisition deepens our capabilities to serve the fullspectrum of credit card customers," said Bobby Mehta, Chairman and CEO of HSBCFinance Corporation. "We are very familiar with Metris and its management teamand look forward to the integration of its business within HSBC." Metris was formed in 1994 and became a public company in 1996. The companyissues credit cards through Direct Merchants Credit Card Bank, N.A., awholly-owned subsidiary headquartered in Phoenix, Arizona. "Being part of a world-class organisation such as HSBC is a logical stepfollowing our successful turnaround of the business," said David Wesselink,Chairman and CEO of Metris. "HSBC and Metris will make a terrific combination,continuing to serve the needs of our customers." Under the terms of the merger agreement, Metris common stockholders will beentitled to receive US$15.00 for each share of Metris common stock for atransaction that closes on or before 9 December 2005. After 9 December 2005, theprice per common share to the common stockholders will decrease by an amountbased on the pay-in-kind dividends that accumulate on Metris' Series C PreferredStock (Preferred Stock), in accordance with its terms. For illustrative purposesonly, if the closing was on 31 March 2006 (the latest date on which closingcould occur under the terms of the contract), the common stockholders wouldreceive US$14.82 per share. The transaction is currently anticipated to close inthe fourth quarter of 2005. The Board of Directors of Metris has unanimously approved the transaction, ashas the Board of Directors for HSBC Finance. As part of the total consideration, the Preferred Stock held by Thomas H. LeePartners, L.P. will receive, in accordance with its terms, approximatelyUS$682.6 million if the transaction closes on or before 9 December 2005.Subsequent to 9 December 2005, the amount payable on the Preferred Stock will beincreased based on the pay-in-kind dividends that accrue on the Preferred Stockin accordance with its terms. The holders have given an irrevocable proxy toHSBC Finance to vote in favour of the transaction. These shares representapproximately 44 per cent of the voting rights of Metris stockholders. Totalconsideration payable to common stockholders, on or before 9 December 2005, isapproximately US$911.1 million. The acquisition is subject to certain conditions including resolution of thepotential civil enforcement action of the Securities and Exchange Commissionagainst Metris as described in Metris' Form 8-K dated 12 July 2005, approval bythe stockholders of Metris and various regulatory consents. HSBC Finance is a subsidiary of HSBC North America Holdings Inc., one of the top10 financial organisations in the United States with assets totalling more thanUS$300 billion. Both companies are wholly-owned subsidiaries of HSBC Holdingsplc (HSBC) which is headquartered in London and is the holding company of theHSBC Group, one of the largest banking and financial services organisations in the world, with well-established businesses in Europe, the Asia-Pacific region,the Americas, the Middle East and Africa. As of 30 June 2005, the HSBC Group hadtotal assets of US$1,467 billion. HSBC is listed on the London, New York, HongKong, Paris and Bermuda stock exchanges. Goldman, Sachs & Co. acted as the lead financial advisor to Metris. UBSSecurities LLC was also a financial advisor to Metris. HSBC Securities (USA)Inc. acted as financial advisor to HSBC Finance. Certain information discussed in this press release may constituteforward-looking statements within the meaning of the federal securities law.Forward-looking statements are based on certain assumptions by management andare subject to risks, trends and uncertainties that could cause actual resultsto differ materially from those in the forward-looking statements. These risksand uncertainties include, but are not limited to: the potential impact of anyfailure to operate in accordance with OCC directives, including those includedin our Modified Operating Agreement; the ability of regulators to imposerestrictions on Direct Merchants Bank that could negatively impact ouroperations or financial results; the risk that failure to comply with applicablelaws, regulations, and card association bylaws and adverse changes in thoselaws, regulations, or card association bylaws, could have a negative impact onour financial results and could adversely affect our ability to conduct ourbusiness in a profitable manner; the fact that we are the subject of an SECinvestigation; that the occurrence of certain events could result in earlyamortisation (required repayment) of the securities issued by the Metris MasterTrust; that our target consumers generally have higher default rates and may beimpacted more by general economic and social factors than lower defaultconsumers; that we require a high degree of liquidity to operate our business,and an inability to access funding at the times and in the amounts that we needcould adversely affect our ability to operate or our financial results; that weare the subject of an Internal Revenue Service examination; that changes in theinterest rates on the funds we borrow and the amounts we loan to our credit cardcustomers could adversely affect our financial results; the fact that we faceintense competition; the fact that our financial results could be negativelyimpacted by fluctuations in our interests in our securitisations; the fact thatour restatements of financial results have had, and may in the future continueto have, adverse effects on us; the effect of changes in the credit card marketas the result of recent judicial decisions with MasterCard and Visa; and thefact that we are exposed to other industry-wide risks that could adverselyaffect our financial performance. For further information on risks that could impact us and the statementscontained in this press release, please refer to our filings with the Securitiesand Exchange Commission, including our current reports on Form 8-K, quarterlyreports on Form 10-Q, and annual reports on Form 10-K, as amended. Notes to editors: 1. HSBC Finance Corporation HSBC Finance Corporation subsidiaries primarily provide middle-market consumerswith real estate secured loans, auto finance loans, MasterCard and Visa creditcards, private label credit cards, personal loans, tax refund anticipation loansand specialty insurance products. 2. HSBC - North America Holdings Inc. HSBC - North America comprises all of HSBC's US and Canadian businesses,including the former Household International businesses. The company'sbusinesses serve more than 60 million customers in five key areas: personalfinancial services, consumer finance, commercial banking, private banking andcorporate, investment banking and markets. Financial products and services areoffered under the HSBC, HFC and Beneficial brands. For more information, visit:www.hsbcusa.com. 3. HSBC Holdings plc HSBC Holdings plc serves more than 110 million customers worldwide through morethan 9,700 offices in 77 countries and territories in Europe, the Asia-Pacificregion, the Americas, the Middle East and Africa. With assets of US$1,467billion at June 30, 2005, HSBC is one of the world's largest banking andfinancial services organisations. HSBC is marketed worldwide as 'the world'slocal bank.' 4. Metris Companies Inc. Metris Companies Inc. (NYSE:MXT), based in Minnetonka, Minnesota, is one of thelargest bankcard issuers in the United States. The Company issues credit cardsthrough Direct Merchants Credit Card Bank, N.A., a wholly-owned subsidiary inPhoenix, Arizona. This information is provided by RNS The company news service from the London Stock Exchange

Related Shares:

HSBC Holdings
FTSE 100 Latest
Value9,023.81
Change10.82