Aaron's Gets A Buyout Bid



Vintage Capital Management has tried three times since 2011 to buy Atlanta-based rent-to-own retailer Aaron's, none of them successful. The fourth time, it is making its offer public.

The Orlando-based private equity group, which has bought up 10 percent of Aaron's stock since December, has made an offer to purchase Aaron's for $30.50 a share in cash, or about $2.3 billion, based on the number of current shares outstanding.

That offer price is a 12.8-percent premium above yesterday's closing price, but it's a 9 percent premium above the 50-day moving average for the company's stock.

Aaron's stock price rose 4 percent last year, a year in which the broader markets soared 30 percent. And the company's stock has largely remained in the $25 to $30 a share range since 2011, the period in which Vintage has tried to buy the company. "Aaron's stock price has performed poorly while the general stock market indices have appreciated significantly," Brian Kahn, Vintage managing member, said in a letter to Aaron's board.

In that letter, Kahn said that Vintage privately submitted three separate offers to acquire Aaron's since 2011, and each of those offers was "summarily ignored by the board of directors at the expense of your unknowing stockholders," he said. This time, the company has bought up shares in the company's stock and has filed documents with the SEC as an activist investor, meaning it intends to make its views known with Aaron's board.

On Wednesday, Kahn said that Vintage reiterated its interest in acquiring the franchise in a meeting with Aaron's Chairman and CEO Ron Allen. Kahn also noted a "strong belief that Aaron's is at a crossroads that will culminate with a sale of the company."

News of the of the offer by Vintage came on the same day that Aaron's said that its fourth quarter revenues decreased 2 percent to $553.9 million, while full-year revenues increased 1 percent to $2.235 billion. Allen said in a statement that the financial results for the quarter "did not meet expectations." He blamed the current economic environment, particularly its pressure on the company's core consumers. "2013 has been a year of challenges and change for Aaron's and growing revenues and adding customers has been difficult with the ongoing economic pressures on low to middle income consumers," he said.

Kahn said that Vintage and its principals have had a relationship with Aaron's for 18 years, including several years as the company's second largest franchisee. Vintage also owns Buddy's Home Furnishings, a rent-to-own business operating primarily in the Southeast.

"We believe we are uniquely positioned to consummate this transaction on an accelerated basis and deliver substantial and certain value to Aaron's stockholders," Kahn wrote.

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News, notes and commentary on franchise financing, including SBA lending, both the SBA 7(a) program and the SBA 504 program, franchise finance programs, development incentives, big deals and startup lending.

  Mary Jo Larson is the publisher of Franchise Times Magazine and its sister publication, the Restaurant Finance Monitor. She is a frequent speaker at meetings and conferences, and at the Restaurant Finance & Development Conference. You can find her on Twitter at @mlarson1011.
  Reporter Jonathan Maze covers restaurants and finance for Franchise Times. He also writes for our sister publication, The Restaurant Finance Monitor, and writes a daily blog on the restaurant industry at www.restfinance.com. You can also catch him on Twitter at @jonathanmaze.

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