Rent-A-Center accepts $15-a-share offer
Rent-A-Center said Monday that its board has accepted a $15-a-share offer from Florida-based Vintage Capital. The deal is valued at $1.365 billion, including debt.
Vintage Capital first offered $13 a share last fall and then last week said it would pay $14 a share. And just a week ago, the board said it had ended its strategic review and had not received an offer it could accept.
Rent-A-Center, which has 17 stores in the Denver metro area, closed at $12.03 a share on Friday, down 34 cents.
Monday’s offer is not subject to a financing condition and is expected to close by the yearend. Shareholders will receive cash for each share. And the $15a-share offer represents a 49 percent premium over the closing price on Oct. 30, just prior to the board’s announcement that it was in the process of evaluating strategic alternatives, including a sale.
The board, which includes seats controlled by activist investors Engaged Capital which started pushing for a sale in 2016, unanimously approved the process.
“Vintage is a natural partner for Rent-A-Center given its deep knowledge of the rent-to-own industry, and we look forward to partnering with them to realize the full benefits of the transaction,” said Rent-A-Center CEO Mitch Fadel in a statement Monday.
The Florida-based private equity firm has invested in the rent-to-own business for some time. It’s the controlling shareholder of Buddy’s Home Furnishings, a fast-growing Floridabased competitor of Rent-A-Center. Buddy’s is the third largest rent-to-own chain with 330 stores, mostly in the South, according to Vintage’s website.
A few years ago, Vintage also tried to buy Aaron’s Inc., which bumped Rent-A-Center as the biggest U.S. rent-to-own retailer by revenue in 2016.
“We believe that the combination of Rent-A-Center, Buddy’s and Vintage is a compelling opportunity to utilize our resources and expertise to enhance value and create a leader in the rent-to-own industry,” said Brian R. Kahn, managing member and founder of Vintage Capital and chairman of the board of Buddy’s.
Rent-A-Center had sales of $2.7 billion last year. For many years it was as the largest rent-to-own retailer, but lost that spot to Atlantabased Aaron’s Inc. in 2016. Aaron’s had 2017 sales of $3.38 billion.
Over the past year, Rent-A-Center, which also runs 1,100 financing kiosks for other retailers under the Acceptance Now brand, closed 166 stores and now operates 2,287 U.S. stores and 123 stores in Mexico.
In March, Rent-A-Center also reduced its headcount at its Plano headquarters, by 25 percent. The company didn’t say Monday what would happen to its 750person headquarters staff in Plano.
A spokesman for Rent-A-Center declined to comment on the company’s future headquarters location once the sale is completed. Buddy’s is based in Orlando.