Rent-A-Center (NASDAQ:RCII) stock is plummeting on Tuesday following the company making a decision that it was no longer planning on completing a deal that would have seen it being bought out by another company.
The Plano, Texas company had a deal in place that was designed to have affiliates of Vintage Capital Management LLC acquire it, but it has reportedly changed its mind as the agreement no longer works for it. The furniture rent-to-own service provider said that it made the decision to not follow through with the deal due to its current financial and operational performance.
Rent-A-Center added that it decided to no longer extend the end date of the deal as it will instead make the decision to end the agreement, exercising its right to do so. The group that was close to buying it notified the rent-to-own provider that ending the deal would put it on the hook for a “reverse breakup fee” that amounts to $126.5 million, which is to be paid within three business days.
The agreement would have seen a Vintage Capital affiliate acquire Rent-A-Center for approximately $15 a share, which was roughly $18.3 million. The deal was first made public in June.
CEO Mitchell E. Fadel took over as boss to kick off the year after 27 years of experience in the rent-to-own industry.
RCII stock is sinking about 9.1% today on the news.