Rent-A-Center Inc (NASDAQ:RCII) stock is soaring on news that Vintage Capital Management, LLC is acquiring the company.
The deal will have Vintage Capital Management paying $800 million to acquire Rent-A-Center Inc. This comes to $15 per share for RCII stock. That represents a 24% premium to the stock’s closing price on Friday. It is also a 48% premium over the stock’s closing price on Oct. 30, 2017, which is when its Board of Directors announced it was considering strategic alternatives.
Vintage Capital Management says that it will be buying all outstanding shares of RCII stock with cash. The deal isn’t subject to a financing condition. When taking into account for net debt, the total value of the deal reaches $1.37 billion.
Rent-A-Center Inc notes that its Board of Directors has given their unanimous approval to the deal. However, it will still need to complete other customary closing conditions before it reaches completion. This includes a vote from shareholders. The Board is advising holders of RCII stock to vote in favor of the deal.
“Vintage is a natural partner for Rent-A-Center given its deep knowledge of the rent-to-own industry, and we look forward to partnering with them to realize the full benefits of the transaction,” Mitch Fadel, CEO of Rent-A-Center Inc, said in a statement.
Rent-A-Center Inc says that it is expecting the deal with Vintage Capital Management to close by the end of 2018. If all goes well, the deal will close and Rent-A-Center Inc will become a privately held company.
RCII stock was up 22% as of Monday afternoon.
As of this writing, William White did not hold a position in any of the aforementioned securities.