Rent-A-Center Mulls Acquisition Offer
Vintage Capital has offered to buy Rent-A-Center Inc for around $800 million, according to a letter seen by Reuters, in a move that would add another rent-to-own company to the private equity firm's portfolio. Rent-A-Center, based in Plano, Texas, rents out furniture and electronics and also allows customers the ability to own the products through a lease program. Last month, shareholders ousted three of Rent-A-Center's board directors after a campaign by activist hedge fund Engaged Capital for major changes ended in a full-blown proxy fight. Three of Engaged Capital's nominees replaced the company's directors as a result.
Total Retail's Take: Rent-A-Center is coming off of a tough year — same-store sales decreased 6.2 percent, overall sales declined 9.61 percent, and profits dipped nearly 9 percent — and its shareholders are, predictably, unhappy. Led by activist hedge fund Engaged Capital, which holds a 16.9 percent stake in Rent-A-Center, there were calls for Rent-A-Center's board of directors to explore the sale of the company. If the bid from Vintage Capital is accepted and approved, Rent-A-Center would join competitor Buddy's Home Furnishings as part of the private equity firm's portfolio. However, this may be a moot point. In an emailed statement to Reuters, Rent-A-Center wrote that Vintage Capital's proposal "significantly undervalues the company" and its strategic plan. It appears that Vintage Capital will have to sweeten its offer in order for Rent-A-Center to agree to be acquired.