The board of rent-to-own giant Aaron’s formally rejected on Tuesday a takeover bid by an Orlando-based private equity firm.
In a press release making the announcement, Aaron’s called the $2.3 billion offer from Vintage Capital Management “inadequate” and questioned the firm’s financing of a deal.
“We carefully evaluated the Vintage proposal and directed our financial advisors to engage with Vintage on two separate occasions,” the board said in the release. “In those conversations, Vintage was unwilling to provide customary visibility into its ability to finance the transaction, including the source of the equity funding it would need to complete a transaction.”
Aaron’s also announced it has purchased Progressive Finance for $700 million, its largest acquisition ever. Progressive helps connect consumers with retailers and has a large footprint in the rent-to-own industry.
“Progressive’s relationships with some of the largest national retailers, including 40 of the top 100 and eight of the top 20 U.S. furniture and bedding retailers – such as Mattress Firm, Big Lots, Art Van Furniture and Sleepy’s – will open at least 15,000 new doors as sources of revenue for Aaron’s,” Aaron’s said in its release.
In addition, Aaron’s reduced its guidance on earnings and revenue for the first quarter, saying winter weather had an adverse affect on performance. More than 80 percent of company-owned stores are in states affected by severe weather in January, February and early March, the company said.
“Like many retail companies, we continue to be adversely affected by the current macroeconomic environment, and many of our stores we negatively impacted by abnormal weather conditions during the quarter,” said said Ronald W. Allen, Chief Executive Officer of Aaron’s. “As a result, our revenues and earnings will not meet expectations for the quarter.
“Both same-store revenue and customer growth in company-operated stores declined by approximately 2 percent in the quarter, and franchised stores as a collective group also experienced negative same store revenues and customer growth,” he said.
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