June 18, 2018 / 12:13 PM / a year ago

Vintage Capital to take Rent-A-Center private in $1.37 billion deal

(Reuters) - Rent-A-Center Inc (RCII.O) agreed to be taken private by buyout firm Vintage Capital Management in a deal that valued the rent-to-own furniture retailer at $1.37 billion, including debt, following a year-long pressure from activist investors.

Vintage’s $15 per Rent-A-Center share - its fourth offer since last July last year - was at a premium of 25 percent to the retailer’s Friday close.

The latest offer also matched Vintage’s first bid, which Rent-A-Center rejected as being undervalued.

Rent-A-Center’s shares rose to a high of $14.78 in morning trade.

Plano, Texas-based Rent-A-Center has been under pressure from activist investors Engaged Capital and Marcato Capital to sell itself and said last week that a strategic review did not result in a satisfactory takeover offer.

Following the announcement, Vintage Capital, which owns nearly 6 percent of the retailer and also holds a majority stake in the company’s rival Buddy’s Home Furnishings, sweetened its offer to $14 per share.

“Vintage wanted, and arguably needed, to make this deal in order to shore up its advantage in the rent-to-own space,” Spieckerman Retail’s Carol Spieckerman told Reuters.

Rent-A-Center, which owns a total of 2,463 stores in North America, has been posting declining quarterly sales since the second half of fiscal 2015 and put itself up for sale last year and again early this year.

Florida-based Vintage Capital revised its offer several times, including one last week that it said was its final offer, to finally seal the deal at $15 per share.

“Vintage had little choice and needed to pay a price that left no room for haggling,” Spieckerman said.

The equity value of the deal is $801.2 million, according to Reuters calculations. The deal is expected to close by the end of 2018, Rent-A-Center said.

J.P. Morgan Securities is Rent-A-Center’s financial adviser, while B. Riley FBR advised Vintage.

Reporting by Nivedita Balu in Bengaluru; Editing by Sai Sachin Ravikumar, Sriraj Kalluvila and Sweta Singh

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