Retailer’s Chairman Steven Pepper Resigns Over Dispute with Board’s Decision
Rent-A-Center Inc. (NASDAQ/NGS: RCII), among the nation’s largest rent-to-own shop operators, which revealed early today plans to think about alternatives consisting of a sale of the chain which runs around 2,500 stores now has an at least one proposition to think about.
Vintage Capital Management LLC, an Orlando-based personal equity fund, made a nonbinding offer today to get all of the outstanding shares of the company for $13 per share in money.
Financiers don’t appear too fired up about the offer. Rent-A-Center’s stock leapt onlu about $1 per share to about $10.90/ share on news of the offer.
Rent-A-Center encouraged its shareholders not to take any action at this time however said it would review the offer.
[Editor’s Note: This story was upgraded Friday Nov. 3, 2017 at about 1:15 pm EST with news of the deal]
The Plano, TX-based company revealed earlier today that its chairman, Steven L. Pepper, resigned from his position efficient instantly. Pepper notified the company that his resignation was an outcome of his dispute with the board’s choice to start a tactical evaluation process for the retailer.
Rent-A-Center will suspend its stock dividend payments until it completes its review. The board’s choice follows calls from activist financiers to put the business up for sale after apparently decreasing buyout offers from a handful of private equity companies this year, consisting of an $800 million offer from private equity company Vintage Capital in June.
Engaged Capital, a Newport Beach financial investment company with a stake in the company, commended the board’s choice calling it long overdue.
“Engaged Capital thinks that Rent-A-Center stays an appealing acquisition opportunity. Our company believe the company’s strong cash flow generation, liquidity and management position in the appealing rent-to-own market integrate to underpin prospective transaction cost varieties that would permit both investors and a potential acquirer to realize considerable worth,” the business stated.
Engaged Capital also claimed Rent-A-Center previously cannot pursue reputable quotes at significant premiums to its stock cost earlier this year, including, “Engaged Capital reminds the board that our analysis shows that a strategic acquirer could recognize $300 million or more of synergies and operational enhancements.”
The firm has actually engaged J.P. Morgan as its financial advisor and Winston & & Strawn LLP as legal advisor. Rent-A-Center reported a loss this week the three months ended Sept. 30 of $12.6 million vs a $6.2 million profit for the same quarter last year.