Rent-A-Center, Inc., a leader in the rent-to-own industry, announced that it has entered into a definitive agreement with Vintage Rodeo Parent, LLC, an affiliate of Vintage Capital Management, LLC, pursuant to which Vintage will acquire all of the outstanding shares of Rent-A-Center common stock for $15.00 per share in cash. The transaction, which is not subject to a financing condition, and is expected to close by the end of 2018, subject to customary closing conditions including the receipt of stockholder and regulatory approvals, represents a total consideration of approximately $1.365 billion, including net debt.
Under the terms of the Merger Agreement, Rent-A-Center stockholders will receive $15.00 in cash for each share of Rent-A-Center common stock, which represents a premium of approximately 49 percent over the Company’s closing stock price on October 30, 2017, immediately prior to the announcement that the Company’s Board of Directors initiated a process to evaluate strategic and financial alternatives focused on maximizing stockholder value. The Rent-A-Center Board has unanimously approved the transaction and recommends that stockholders vote in favor of the transaction. 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 Rent-A-Center Board, having just completed a comprehensive review of strategic and financial alternatives in consultation with outside legal and financial advisors, unanimously supports this transaction and is confident it maximizes value for stockholders while delivering a significant and immediate cash premium,” said Mitch Fadel, Chief Executive Officer of Rent-A-Center. “Today’s exciting announcement reflects the significant progress we have made to materially improve our performance and would not have been possible without the hard work and focus of our talented co-workers over the last several months. 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.”
“We have long admired Rent-A-Center and are pleased to have reached this agreement to expand our rent-to-own portfolio,” said Brian R. Kahn, Managing Member and Founder of Vintage Capital and Chairman of the Board of Members of Buddy’s Newco, LLC d/b/a Buddy’s Home Furnishings (“Buddy’s”), a rent-to-own operator and franchisor, the controlling shareholder of which is Vintage Capital. “We believe that the combination of Rent-A-Center, Buddy’s and Vintage is a compelling opportunity to utilize our resources and expertise to enhance value and create a leader in the rent-to-own industry.”
B. Riley Financial, Inc. and certain of its affiliates have committed to serve as equity and debt participants in the transaction.
According to a regulatory filing, terms of a Debt Commitment Letter, dated as of June 17, 2018, by and among B. Riley, the Parent and Guggenheim Corporate Funding, LLC, B. Riley and Guggenheim, subject to the satisfaction or waiver of the terms and conditions of the Debt Commitment Letter, have agreed to provide to the Borrower concurrently with the Merger Closing a senior secured Term Loan Facility in the aggregate principal amount of $800 million consisting of (i) a $400.0 million in aggregate principal first out term loan to be provided by Guggenheim and (ii) a $250.0 million in aggregate principal second out term loan and a $150.0 million last out term loan in aggregate principal third out loan (the “Last Out Term Loan”) to be provided by B. Riley. Additionally, GACP Finance Co., LLC, a subsidiary of B. Riley, has agreed to provide the Borrower with a $275.0 million term loan secured by a first priority lien on certain specified leasing contracts and related collateral (the “GACP Collateral”). to the terms of the Debt Commitment Letter, B. Riley and Guggenheim have agreed to act as joint lead arrangers and joint bookrunners for the Term Loan Facility. Additionally, the Debt Commitment Letter provides that Guggenheim will act as administrative agent and B. Riley will act as Collateral Agent for the Term Loan Facility.
B. Riley and Guggenheim are also permitted to syndicate all of a portion of their commitments for the Term Loan Facility to a group of banks, financial institutions, institutional lenders and other entities and investors identified by B. Riley and Guggenheim in consultation with the Borrower, excluding certain disqualified institutions identified in the Debt Commitment Letter.