Aaron's Hires Goldman Sachs



Aaron's, Inc., today said that it has hired Goldman, Sachs & Co. as an advisor, as the Atlanta-based rent-to-own franchise analyzes an offer from Vintage Capital Management to buy the company for $30.50 a share.

The announcement comes days after Brian Kahn, a managing member at Vintage, complained in a letter to Aaron's board that his company hasn't been contacted by anyone at Aaron's about the offer.

In addition, Kahn complained about some changes to Aaron's bylaws that he said would make it more difficult for shareholders to push changes at the company. The board "has focused on potentially silencing stockholders" by accelerating the deadline for nominating directors at this year's annual meeting and by making it more difficult for stockholders to "hold the board accountable" at that meeting, he said.

Vintage has been involved with Aaron's for 18 years, and has even been a franchisee. It also owns Buddy's Home Furnishings, a rent-to-own business that operates in the Southeast. Vintage has been trying to buy Aaron's for years, to no avail. This year, the private equity group bought up 10 percent of Aaron's stock, and then started putting public pressure on the company to sell.

In an update this morning, Aaron's said that it has formed a transaction committee, with independent outside directors and the assistance of advisors, to review the proposal. Also, the board said it is reviewing strategies to "enhance long-term value" for Aaron's shareholders. Greenberg Traurig, LLP is the lead legal advisor, and The Blackstone Group is another financial advisor.

The effort "underscores the commitment of Aaron's board and management team to fully evaluate the Vintage proposal as well as all opportunities to create and enhance long-term value for all Aaron's shareholders," Aaron's Chairman and CEO Ronald Allen said in a statement. He also said that the company has been in regular dialogue with investors about the decision.

In his letter to the board, Kahn complained about a decline in Aaron's business. "We believe that Aaron's has lost at least 50,000 more customers since January 1, 2014, making it imperative that the board of directors take decisive action now to stabilize the business and begin to restore lost revenue," he wrote. "The board's continued support for a management team that has consistently overpromised and underperformed is puzzling." He said that the company's 2014 business plan "appears to offer more of the same and, with the recent customer losses, already looks to be difficult to achieve."

Kahn said his company could acquire Aaron's on an accelerated basis," and he said that the transaction committee and the company's advisors should meet with Vintage to discuss the offer.

He also left open the possibility that Vintage may take further steps to pressure the company. The company's recent bylaw changes "may leave us no choice but to seek out new directors or take other actions in the near future to ensure that stockholders have a seat at the board table."

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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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