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Why This Finance Stock Is Up More Than 75% Today

By Howard Smith – Dec 18, 2020 at 10:55AM

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CURO Group Holdings will benefit from a merger announced today.

What happened

Shares of CURO Group Holdings (CURO 0.65%) soared more than 85% Friday morning, and remained up 76% as of 10:45 a.m. EST. A merger announcement between fellow financial company Katapult Holding and special purpose acquisition company (SPAC) FinServ Acquisition (FSRV) is the reason. 

So what 

FinServ announced it will be merging with Katapult to bring the e-commerce focused financial technology (fintech) company public during the first half of 2021. CURO Group shares are soaring because it owns approximately 40% of Katapult. 

A business man points at a series of digital icons representing fintech.

Image source: Getty Images.

CURO is a provider of short-term loans to non-prime, underbanked consumers, while Katapult similarly targets that segment with e-commerce point-of-sale purchase options. 

Now what 

The combination of FinServ and Katapult will be valued at approximately $1 billion, and $365 million will go to CURO in the form of cash and stock based on its ownership stake. CURO's total cash investment in Katapult has been $27.5 million. Prior to today's jump, CURO had a market capitalization of approximately $350 million. 

CURO president and CEO Don Gayhardt said the injection of cash will increase balance sheet flexibility for potential future acquisitions to "expand product offerings and market reach." In addition to a continued equity stake in Katapult, CURO will have board representation on the newly public company. "This transaction is a clear win for CURO and its shareholders," he added in a statement. 

Howard Smith has no position in any of the stocks mentioned. The Motley Fool recommends CURO Group Holdings. Common Stock. The Motley Fool has a disclosure policy.

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