Delaware Court of Chancery Determines Rent-A-Center Validly Terminated Merger Agreement
March 14 2019 - 04:32PM
Business Wire
Defers Ruling on Termination Fee
Rent-A-Center, Inc. (NASDAQ:RCII) (“Rent-A-Center” or the
“Company”), a leader in the rent-to-own industry, today announced
that following trial, the Court of Chancery of the State of
Delaware (the “Court of Chancery”) has ruled that Rent-A-Center
validly terminated the Agreement and Plan of Merger (the “Merger
Agreement”), dated June 17, 2018, by and among the Company and
certain affiliates of Vintage Capital Management, LLC
(collectively, “Vintage Capital”).
The Court of Chancery has requested that the parties submit
additional briefs, after which it will render a decision regarding
whether Vintage Capital and B. Riley Financial, Inc. (as guarantor)
are obligated to pay the $126,500,000 reverse termination fee to
Rent-A-Center.
Mitch Fadel, Chief Executive Officer of Rent-A-Center, said, “We
are pleased that the Court has affirmed the validity of our
termination of the Merger Agreement with Vintage Capital. Looking
ahead, we will continue to focus on executing our strategic plan to
grow our business and enhance value for our stockholders.”
Mr. Fadel added, “We look forward to the Court of Chancery’s
decision regarding the $126.5 million termination fee, and continue
to believe we are entitled to that fee in accordance with the clear
terms of the Merger Agreement.”
As previously announced on December 18, 2018, after the Company
did not receive the extension notice from Vintage Capital that was
required by December 17, 2018 to extend the Merger Agreement’s
stated End Date, the Company terminated the Merger Agreement. The
Board of Directors determined that terminating the Merger Agreement
was in the best interests of the Company’s stockholders, and
instructed Rent-A-Center’s management to exercise the Company’s
right to terminate the Merger Agreement and make a demand on
Vintage Capital and B. Riley Financial, Inc. for the $126.5 million
reverse termination fee owed to the Company following the
termination of the Merger Agreement. Subsequently, on December 21,
2018, Vintage Capital initiated legal proceedings against
Rent-A-Center in the Court of Chancery to enforce the Merger
Agreement, and Rent-A-Center counterclaimed for a declaration that
it validly terminated the Merger Agreement and is entitled to
payment of the termination fee from Vintage Capital and B. Riley
Financial.
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 2,300
stores in the United States, Mexico, Canada and Puerto Rico, and
approximately 1,200 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 280 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. The Company's actual future performance could differ
materially from such statements. Factors that could cause or
contribute to such differences include, but are not limited to: the
outcome of any appeal relating to the litigation initiated by
Vintage Capital and B. Riley challenging the validity of the
termination of the Merger Agreement, and the court’s pending
decision regarding the Company's right to collect on the $126.5
million reverse breakup fee associated with the termination of the
Merger Agreement; risks relating to operations of the business and
the Company’s financial results arising out of the termination of
the Merger Agreement; the effect of the termination of the Merger
Agreement on the Company’s relationships with third parties,
including its employees, franchisees, customers, suppliers,
business partners and vendors, which may make it more difficult to
maintain business and operations relationships, and negatively
impact the operating results of the Company’s business segments and
the Company’s business generally; the risk of material price
volatility with respect to trading in the Company’s common stock
during any appeal relating to the litigation surrounding the
termination of the Merger Agreement; the Company's ability to
continue to effectively operate and execute its strategic
initiatives as a stand-alone enterprise following the termination
of the Merger Agreement.
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version on businesswire.com: https://www.businesswire.com/news/home/20190314005876/en/
Investors:Rent-A-Center, Inc.Maureen Short,
972-801-1899Chief Financial
Officermaureen.short@rentacenter.com
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