Vintage Capital has offered to buy Rent-A-Center Inc (RCII.O) for around $800 million, according to a letter seen by Reuters, in a move that would add another rent-to-own company to the private equity firm’s portfolio.
“While there are multiple avenues we would be eager to explore … today Vintage proposes to acquire 100 percent of the common stock … in a go-private transaction for $15 per share,” the firm’s managing partner, Brian Kahn, wrote in a June 20 letter to the company’s investment bank, JPMorgan Chase & Co (JPM.N).
The company’s stock closed at $11.10 on Monday. Shares hit$40.31 in August 2013 and have steadily declined amid a sales and profit slump. Vintage Capital declined to comment on the letter or the offer.
Rent-A-Center said on Monday it responded to Vintage Capital on July 5.
It said in an emailed statement to Reuters that Vintage Capital’s proposal “significantly undervalues the company” and its strategic plan.
“These initiatives are already delivering substantial progress in key performance metrics, including improved same-store sales and reductions in delinquencies,” Rent-A-Center said in the statement.
Rent-A-Center, a $609 million company based in Plano, Texas, rents out furniture and electronics and also allows customers the ability to own the products through a lease program.
Last month, shareholders ousted three of Rent-A-Center’s board directors after a campaign by activist hedge fund Engaged Capital for major changes ended in a full-blown proxy fight. Three of Engaged Capital’s nominees replaced the company’s directors as a result.
Engaged publicly pressed the board to agree to explore the potential sale of the company, among other demands. The hedge fund now holds a 16.9 percent stake in Rent-A-Center, filings show. Fellow activist Marcato Capital Management held just under 1 percent of the stock as of last quarter, Thomson Reuters filings show.
Vintage Capital is the majority owner of Buddy’s Home Furnishings, a privately run rent-to-own (RTO) peer of Rent-A-Center. Vintage Capital tried to buy fellow RTO company Aaron’s Inc (AAN.N) in February 2014 for $2.3 billion, a bid Vintage dropped two months later after the company resisted.
Buddy’s bills itself as the fastest-growing rental-purchase and lease-to-own company in the United States.
“We are certain that a significant opportunity exists today for (Rent-A-Center), Buddy’s and Vintage to partner rapidly in a manner that benefits all constituents,” Vintage Capital’s Kahn said in the June 20 letter.