Rent-A-Center to buy Acima Holdings in $1.65 billion deal

(Reuters) -Rent-A-Center Inc said on Sunday it would buy Acima Holdings LLC for $1.65 billion in a cash-and-stock deal as it looks to build out its fintech platform across traditional and online lease-to-own businesses.

The deal includes $1.27 billion in cash and about 10.8 million Rent-A-Center common shares currently valued at $377 million, the company said in a statement.

Rent-A-Center is a rent-to-own business, allowing customers to rent furniture, electronics and other goods with the option of eventually purchasing them.

Purchasing Acima, which operates its lease-to-own (LTO) business out of 15,000 retail partner locations, will help Rent-A-Center expand its e-commerce platform and integrate a point-of-sale to support digital transactions.

“Acima will help us strengthen our organization, accelerate growth and increase our virtual partner base,” Rent-A-Center Chief Executive Officer Mitch Fadel said.

Acima is expected to generate about $1.25 billion in 2020 revenue and $225 million in adjusted earnings before interest, taxes, depreciation and amortization, Rent-A-Center said.

Rent-A-Center said it had received $1.83 billion in debt financing from J.P. Morgan Securities LLC, Credit Suisse and HSBC Securities Inc to fund the deal.

The company’s shares closed at $35.22 on Friday, up 22% for the year and giving the company a valuation of $1.9 billion.

The acquisition is expected to close in the first half of 2021.

J.P. Morgan is acting as a lead financial adviser to Rent-A-Center while Acima is being advised by FT Partners.

Reporting by Ann Maria Shibu and Nivedita Balu in Bengaluru; Editing by Aditya Soni and Anil D’Silva