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Duo Bank of Canada has closed a deal to acquire consumer-finance company Fairstone Financial Holdings Inc. less than a month after an Ontario court blocked Duo’s attempt to back out because of the impact of the coronavirus pandemic.

The deal was first announced last February, as Duo looked to add a sizeable subprime-lending business to its core credit-card operation, which is built on a Walmart-branded credit card and rewards program. Subprime borrowers are those with lower credit scores.

It was the first major deal made by Duo Bank, which was formerly Walmart Canada Bank but was renamed after it was acquired from retailing giant Walmart Inc. by financier Stephen Smith and Centerbridge Partners LP, with backing from Ontario Teachers’ Pension Plan.

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Fairstone has about $3-billion in assets, offering mortgages and personal loans through branches across Canada, as well as vehicle loans in third-party auto dealerships. But after COVID-19 swept across the world last year, Duo Bank went to court to argue that the pandemic’s impact was so severe that it fundamentally changed the transaction with Fairstone and that the deal should not close.

Justice Markus Koehnen of the Ontario Superior Court of Justice disagreed, concluding there had not been a material adverse effect, which is a change to the seller company that would justify cancelling the deal. He ordered the parties to close the deal as planned, in a decision that was seen as having implications for the wider business community.

Despite their legal attempt to quash the deal, Duo now says it is optimistic about it.

“We are very pleased with completion of this acquisition and the growth opportunities it affords for the future,” Mr. Smith said in an e-mail.

Financial terms of the deal were not disclosed, but it includes all of Fairstone’s operations and subsidiaries, as well as about 1,400 employees. Fairstone will continue to operate under its current brand.

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