Rent-A-Center Enters Into Definitive Agreement to Acquire Merchants Preferred, a Nationwide Virtual Rent-to-Own Provider
July 15 2019 - 8:30AM
Business Wire
The acquisition will accelerate Rent-A-Center’s
strategy in the rapidly expanding virtual rent-to-own market
Rent-A-Center, Inc. (NASDAQ: RCII) (“Rent-A-Center” or the
“Company”) today announced that it has entered into a definitive
agreement to acquire substantially all of the assets of C/C
Financial Corp. dba Merchants Preferred (“Merchants Preferred”), a
nationwide provider of virtual rent-to-own services.
The acquisition of Merchants Preferred has been unanimously
approved by Rent-A-Center’s Board of Directors and is subject to
customary closing conditions. The Company expects the acquisition
to close in the third quarter. Total consideration consists of $28
million in cash and a minimum of 701,918 shares of Rent-A-Center
common stock. The acquisition is valued at approximately $47.5
million, based on Rent-A-Center’s closing stock price on July 12,
2019, of $27.83. The total consideration and the number of shares
issued will depend upon the stock price at closing but, the number
of shares are expected to be as stated above. The impact to 2019
earnings from the acquisition is not expected to be material.
Mitch Fadel, Chief Executive Officer of Rent-A-Center,
said, “The success and trajectory of our strategic plan have
enabled us to focus on growing our business. The addition of the
Merchants Preferred technology platform and its approximately 2,500
locations enables us to accelerate our expansion plans with respect
to the Company’s virtual rent-to-own capabilities by at least 18
months. We are also excited to add the capabilities of the
experienced Merchants Preferred management team. This acquisition
positions us for growth and differentiates us from competitors,
allowing us to offer both virtual and staffed solutions to our
retail partners.”
Merchants Preferred, founded in 2012 and based in Atlanta,
Georgia, is a nationwide provider of virtual rent-to-own services
for non-prime customers. Merchants Preferred’s advanced technology,
back office infrastructure and outstanding service enable
competitive customer and retailer value propositions. Additionally,
they are led by a highly experienced management team with
experience in the non-prime consumer space.
Joe Corona, President and Chief Executive Officer of Merchants
Preferred, said, “We look forward to becoming part of the
Rent-A-Center organization. Over the last seven years, the
Merchants Preferred team has done an outstanding job building
leading-edge technology and a fundamentally sound enterprise that
is very complementary to the Acceptance Now business model. With
our combined capabilities we can more quickly execute a strategy to
deliver our partners what we believe will be the best in
technology, products, and service.”
Rent-A-Center’s Strategic Rationale and Benefits
Rent-A-Center’s acquisition of Merchants Preferred is expected
to accelerate the expansion of Acceptance Now’s virtual rent-to-own
offering and provide a scalable and seamless solution to capture
additional share in the greater than $20 billion dollar virtual
rent-to-own market. Expanding Merchants Preferred’s and Acceptance
Now’s existing relationships with its retail partners will be a top
priority for Rent-A-Center.
- Accelerates expansion into the virtual rent-to-own space with
advanced technology and back-office infrastructure for use across
Rent-A-Center platforms
- Enhances ability to expand into large, national retail and
online partners
- Creates potential to expand into additional product verticals
outside of home furnishings and electronics
- Provides strategic advantage of offering both staffed and
virtual models
- Adds an additional 2,500 locations to the Acceptance Now
platform
Benefits to Retail Partners
- Only rent-to-own company to serve both the banked and unbanked
customer in partner locations, generating incremental sales for
retail partners
- Provides additional options for retail partners to select from
staffed, virtual, or hybrid models
- Enhances ability to integrate with retail partners’ e-commerce
platforms
- Improves retail partner service through centralized support
team and online portal
Mann, Armistead & Epperson, Ltd. Inc. is serving as the
financial advisor and Winston & Strawn LLP is serving as the
legal advisor to Rent-A-Center. Houlihan Lokey is serving as
financial advisor and Sullivan & Worcester LLP is serving as
legal advisor to Merchants Preferred.
The Company has provided a presentation on
investor.rentacenter.com outlining the transaction. Further
details regarding the Merchants Preferred transaction and the
growth opportunity of the virtual business will be discussed during
the second quarter earnings call in August.
About Rent-A-Center, Inc.
A rent-to-own industry leader, Plano,
Texas-based, Rent-A-Center, Inc., is focused on improving the
quality of life for its customers by providing them the opportunity
to obtain ownership of high-quality, durable products such as
consumer electronics, appliances, computers, furniture and
accessories, under flexible rental purchase agreements with no
long-term obligation. The Company owns and operates approximately
2,200 stores in the United
States, Mexico and Puerto Rico, and approximately
1,100 Acceptance Now kiosk locations in the United
States and Puerto Rico. Rent-A-Center Franchising
International, Inc., a wholly owned subsidiary of the Company, is a
national franchiser of approximately 320 rent-to-own stores
operating under the trade names of “Rent-A-Center,” “ColorTyme,”
and “RimTyme.” For additional information about the Company, please
visit its website at www.rentacenter.com.
Forward Looking Statements
This press release contains forward-looking statements that
involve risks and uncertainties. Such forward-looking statements
generally can be identified by the use of forward-looking
terminology such as "may," "will," "expect," "intend," "could,"
"estimate," "predict," "continue," "should," "anticipate,"
"believe," or “confident,” or the negative thereof or variations
thereon or similar terminology. The Company believes that the
expectations reflected in such forward-looking statements are
accurate. However, there can be no assurance that such expectations
will occur. Factors that could impact such expectations
include, but are not limited to: the ability to satisfy all
conditions required to successfully complete the acquisition; the
ability to realize the strategic benefits from the acquisition,
including achieving expected synergies and operating efficiencies
from the acquisition; the ability to successfully integrate
Merchants Preferred’s operations which may be more difficult,
time-consuming or costly than expected; operating costs, loss of
retail partners and business disruption arising from the
acquisition; the ability to retain certain key employees at
Merchants Preferred; risks related to Merchants Preferred’s virtual
rent-to-own business; the Company's transition to more-readily
scalable, “cloud-based” solutions; the Company's ability to develop
and successfully implement digital or E-commerce capabilities,
including mobile applications; information technology and data
security costs; the impact of any breaches in data security or
other disturbances to the Company's information technology and
other networks and the Company's ability to protect the integrity
and security of individually identifiable data of its customers and
employees; and the other risks detailed from time to time in the
Company's SEC reports, including but not limited to, its Annual
Report on Form 10-K for the year ended December 31, 2018, and its
Quarterly Report on Form 10-Q for the quarter ended March 31,
2019.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190715005198/en/
Rent-A-Center, Inc. Maureen Short EVP, Chief Financial Officer
972-801-1899 maureen.short@rentacenter.com
Rent A Center (NASDAQ:RCII)
Historical Stock Chart
From Mar 2024 to Apr 2024
Rent A Center (NASDAQ:RCII)
Historical Stock Chart
From Apr 2023 to Apr 2024