As part of the continuing shakeout in the sub-prime lending industry, H&R Block, Inc. (NYSE: HRB) announced Friday that it will sell its Option One Mortgage Corp. unit to focus on its core financial services.

The company said it will sell the lending group to OOMC Acquisition Corp., a newly formed company affiliated with Cerberus Capital Management L.P. The cash purchase price will be the value of the tangible net assets of the business when the deal closes, less $300 million.

As of January 31, H&R Block says Option One had tangible net assets of $1.27 billion. The company says that the value of Option One could change if the firm decides to sell some assets before the close.

In addition, H&R block could choose to receive an additional cash payment in the form of an '˜earnout,' which could reach up to $300 million in the 18 months after the close of the acquisition.

Kansas City, Mo.-based Block has been looking to sell the unit since last November as the sub-prime mortgage sector in the U.S has deteriorated.

"With the changes occurring and being discussed for the U.S. mortgage industry, Option One will be positioned to more effectively compete, while allowing H&R Block to focus on growing its core tax, accounting and aligned financial services businesses' said H&R Block Chairman and CEO, Mark Ernst.

The transaction, which is expected to close during the company's second fiscal quarter, will exclude Option One subsidiary H&R Block Mortgage Corp.

Shares of H&R Block rose 75 cents, or 3.4 percent, to $22.58 in afternoon trading on the New York Stock Exchange.