Rent-A-Center, Inc., the nation’s largest rent-to-own operator, announced the acquisition of The Rental Store, Inc. (“TRS”), a leading provider of consumer lease-purchase financing through third-party retail furniture and electronics retailers, operating approximately 145 kiosk locations.
The Company acquired TRS on a debt free basis, using a portion of the purchase price to pay off all of TRS’ existing debt. The purchase price in the amount of $75.5 million was paid by the Company primarily with cash on hand.
“We are very excited about adding TRS to our RAC Acceptance business which we believe significantly accelerates the expansion of this growth initiative and increases our opportunities for further growth in this area,” commented Mark E. Speese, the Company’s Chairman and Chief Executive Officer. “In addition, given our track record of successfully integrating acquisitions, we believe this transaction will create additional value for our stockholders, adding approximately $100 million in revenue and $15 million in operating income next year,” continued Mr. Speese.
In connection with this transaction, Rent-A-Center was advised by McColl Partners, LLC and Fulbright & Jaworski, LLP.
The Company also announced that in connection with the evaluation of its strategic alternatives with respect to its financial services business, it has sold a majority of its customer accounts at approximately 207 financial services store locations. The Company also announced it will close seven financial services store locations in Montana at December 31, 2010, as a result of state law changes enacted in the November general election. The guidance for fiscal year 2011 previously provided by the Company in its earnings release dated October 25, 2010 included approximately $72 million in revenue and $11 million in operating income attributable to its financial services business.
“As we transition our financial services operations, we are pleased to have additional resources to deploy against the exciting growth initiatives outlined at our Investor Day conference in November,” Mr. Speese added. “We believe the acquisition of TRS demonstrates our commitment to fully realizing the strategic opportunities available to us today,” Mr. Speese said.
Rent-A-Center, Inc., headquartered in Plano, Texas, currently operates approximately 3,000 company-owned stores nationwide and in Canada, Puerto Rico, and Mexico. The stores generally offer high-quality, durable goods such as major consumer electronics, appliances, computers and furniture and accessories under flexible rental purchase agreements that generally allow the customer to obtain ownership of the merchandise at the conclusion of an agreed upon rental period. ColorTyme, Inc., a wholly owned subsidiary of the Company, is a national franchiser of approximately 200 rent-to-own stores operating under the trade name of "ColorTyme."