Engaged Capital Issues Statement in Respect of Rent-A-Center
July 25 2017 - 08:00AM
Business Wire
Engaged Capital, LLC (together with its affiliates, “Engaged
Capital”), an investment firm specializing in enhancing the value
of small and mid-cap North American equities and the largest
shareholder of Rent-A-Center, Inc. (“RCII” or the “Company”)
(NASDAQ:RCII) with a 20.5% economic interest, today issued the
following statement regarding its investment in RCII:
“We are outraged to learn that according to media reports, prior
to rejecting a $15 per share offer from Vintage Capital, the board
of directors of RCII received expressions of takeover interest from
two other private equity firms. Neither of these prior approaches
were disclosed to shareholders, even in the context of rejecting
the offer from Vintage Capital.
In June, shareholders of RCII sent the board a clear and
unambiguous message when they overwhelmingly elected all three of
Engaged Capital’s nominees to the board, despite a pattern of
entrenchment tactics from the incumbents. This wholesale rejection
of the Company’s nominees included unseating CEO Mark Speese from
the board, who was Chairman at the time. While we cannot know what
is going on in the boardroom, we find it hard to believe that the
recently elected directors, who ran on a platform to evaluate all
opportunities to enhance shareholder value, would not support
engaging with potential acquirers. Assuming the media reports are
true, we are concerned that the four remaining incumbent directors
are willfully ignoring the voices of the majority of shareholders
to continue the blind pursuit of the Company’s risky turnaround
plan.
While we believe that given their tenure, some of the incumbent
directors may hold a personal loyalty to Mr. Speese and are willing
to put their relationship with him ahead of their duties to
shareholders, we are puzzled why, if true, director Rishi Garg, a
partner at the Mayfield Fund and a professional investor, would
support the value destructive path chosen by the incumbent
directors? We are shocked at the notion that a sophisticated
investor from the Mayfield Fund could be party to a board process
and decisions that run contrary to the basic tenets of good
corporate governance and shareholder democracy. Engaged Capital
calls on Mr. Garg and the other members of the board to act as
independent fiduciaries and choose a path that offers the best
risk-adjusted outcome for all shareholders,” said Glenn W. Welling,
Chief Investment Officer of Engaged Capital.
About Engaged Capital:
Engaged Capital, LLC (“Engaged Capital”) was established in 2012
by a group of professionals with significant experience in activist
investing in North America and was seeded by Grosvenor Capital
Management, L.P., one of the oldest and largest global alternative
investment managers. Engaged Capital is a limited liability company
owned by its principals and formed to create long-term shareholder
value by bringing an owner’s perspective to the managements and
boards of undervalued public companies. Engaged Capital’s efforts
and resources are dedicated to a single investment style,
“Constructive Activism” with a focus on delivering superior,
long-term, risk-adjusted returns for investors. Engaged Capital is
based in Newport Beach, California.
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version on businesswire.com: http://www.businesswire.com/news/home/20170725005784/en/
Bayfield Strategy, Inc.Riyaz Lalani,
416-907-9365rlalani@bayfieldstrategy.com
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