Vintage Capital to Buy Rent-A-Center for $1.37 Billion

Rent-A-Center, a company that rents out furniture and electronics and also allows customers the ability to own the products through a lease program, said today that it will be acquired by an affiliate of buyout firm Vintage Capital Management in a deal valued at $1.37 billion, including debt. The affiliate, Vintage Rodeo Parent, will buy the company for $15 per Rent-A-Center share, $1 per share above its previous offer price and representing a premium of 25 percent to the stock's Friday closing price. The transaction, which is not subject to a financing condition, is expected to close by the end of 2018. Upon completion of the transaction, Rent-A-Center will become a privately held company and its common shares will no longer be listed on any public market. The announcement "reflects the significant progress we've made to materially improve our performance," said Mitch Fadel, CEO of Rent-A-Center, in a statement. "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."

Total Retail's Take: Today's Rent-A-Center news isn't surprising. In July 2017, Vintage Capital offered to buy Rent-A-Center for roughly $800 million after activist hedge fund Engaged Capital, which holds a 16.9 percent stake in Rent-A-Center, called on the retailer's board of directors to explore the sale of the company to try to improve its performance. Revisiting the idea made sense again as the company's recent financial report was dismal. In fact, total revenues in the first quarter of 2018 were $698 million, a 5.9 percent loss. In addition, the company had a net loss of $19.8 million.