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Encore Capital buying Cabot stake for access to UK

SAN DIEGO (AP) -- Encore Capital, which buys defaulted consumer loans, is acquiring a controlling stake in Cabot Credit Management for about $192 million to take advantage of growth opportunities in the U.K.

Encore buys soured consumer debt from banks, credit unions and utilities and then tries to get payments from individuals through collections agencies.

The San Diego-based company said Thursday that it had been looking for a partner in the U.K. for several years. Cabot is "well positioned" to bid on distressed consumer loans that are likely to come to market in the U.K. over the coming years as banks look to get rid of them, said Encore President Ken Vecchione, who will become CEO in June.

Encore, which is buying a 50.1 percent interest in Cabot Credit Management, may buy the rest of the company from private equity firm J.C. Flowers & Co. LLC four to six years after its initial purchase. The deal is targeted to close in the third quarter.

Cabot had revenue of 161 million pounds (about $260 million) last year. It has purchased 3.5 million consumer accounts.

Encore has been growing by buying loan portfolios from competitors, with two big transactions last year. In March Encore announced that it was buying a competitor, Asset Acceptance, for about $200 million.

Shares of Encore Capital Group Inc. rose 34 cents to $35.47 in morning trading. The stock has gained about 44 percent over the past 12 months.