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Sydnee Gatewood
Sydnee Gatewood
Articles (925) 

Leucadia National Takes Stake in Easterly Acquisition

Blank check company to merge with JH Capital

September 11, 2017 | About:

New York-based investment firm Leucadia National (Trades, Portfolio) established a 12.1% stake in Easterly Acquisition Corp. (EACQ) on Aug. 31, according to GuruFocus real-time picks.

Managing a portfolio of 53 stocks, the firm invests heavily in the consumer cyclical sector, which composes 80.3% of its current holdings.

The firm purchased 2.5 million shares of Easterly Acquisition for an average price of $10.05 per share, giving it 2.12% portfolio space.

The special purpose acquisition company, which went public in 2015, has a market cap of $208.14 million; it shares were trading around $10.05 per share on Monday with a price-book (P/B) ratio of 50.25.

The trend in the stock’s price since its initial public offering is illustrated in the graph below.

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GuruFocus ranked Easterly’s financial strength 6 of 10 and its profitability and growth 3 of 10.

In June, the company announced it will be merging with specialty finance company JH Capital Group Holdings LLC and be renamed JH Capital Group Holdings Inc. The company will then trade on the Nasdaq exchange under the ticker “JHCG.” The initial market cap is expected to be approximately $412 million.

According to the terms of the deal, which is expected to close in December, Easterly will gain a controlling equity interest in JH Capital. In addition, JH Capital’s current shareholders will transfer their existing equity into the combined company and retain approximately 45.4% ownership.

Easterly’s $200 million trust account will be used to grow the newly combined company and repay existing subordinated debt.

After the close of the deal, JH Capital’s management team will remain with the company. Members of both companies’ boards will serve on the joined company’s board of directors. In addition, JH Capital’s current owners will retain a substantial equity stake and are not selling any of their shares as part of the transaction.

Darrell Crate, chairman of Easterly, said the deal will allow the company to become a leader in the debt recovery space.

“Their consumer-oriented focus leads to superior outcomes for the customers they serve and for shareholders,” Crate said. “This transaction will strengthen JH Capital’s balance sheet and provide growth capital to execute on the significant opportunity in the debt recovery industry.”

JH Capital CEO Douglas Jacobsen agreed.

“Easterly’s management team has a track record of bringing innovative, growing companies to the public markets,” Jacobsen said. “Our partnership will allow us fully to harvest our definable edge in debt recovery and to grow our business through existing channels and through acquisition.”

With 4.26% of outstanding shares, Louis Moore Bacon (Trades, Portfolio) is the only other guru invested in Easterly.

Disclosure: I do not own any stocks mentioned.

About the author:

Sydnee Gatewood
I am the editorial director at GuruFocus. I have a BA in journalism and a MA in mass communications from Texas Tech University. I have lived in Texas most of my life, but also have roots in New Mexico and Colorado. Follow me on Twitter! @gurusydneerg

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