After being turned down three times, it seems that the private equity firm, Vintage Capital Management LLC is now leaving no stone unturned to successfully acquire the rent-to-own retailer, Aaron’s Inc. (AAN - Snapshot Report). Notably, on Mar 7, Vintage Capital sent a notice to Aaron’s intimating it of the nomination of five candidates to the latter’s board at the Annual General Meeting (AGM) to be held in May.
The aforementioned move will enable Vintage Capital to have a majority in Aaron’s nine-member board. Further, the private equity firm has revealed that it could consider raising the buyout price after negotiating with Aaron’s management.
Additionally, the founder of Vintage Capital, Brian Kahn, has criticized the ill-advised strategies of current Chairman and Chief Executive of Aaron’s, Ronal W. Allen for the downfall of Aaron’s. We believe that a change in leadership will reinstate the former glory of Aaron’s.
Later, on the same day, Aaron’s confirmed having received Vintage Capital’s notice. Apart from this, Aaron’s declared that it had received another notice from Starboard Value LP for nominating four candidates in its board.
Aaron’s also provided an update stating that the Transaction Committee formed to evaluate Vintage Capital’s acquisition offer has still not reached a conclusion. Moreover, the committee is looking for other opportunities to enhance the long-term value of shareholders.
Last month, Vintage Capital made an offer of $30.50 per share or $2.3 billion to acquire the leading rent-to-own retailer. In response, Aaron’s had formed a Transaction Committee on Feb 21 to evaluate Vintage Capital’s offer.
Prior to the current offering, Vintage Capital had made three private proposals for acquiring Aaron’s, which were ignored by the latter. Thereafter, the investment firm increased its shareholding to approximately 10% in the company, consequently becoming the largest stakeholder and decided to publicly disclose its offering.
Aaron’s has been witnessing soft top and bottom-line performances for the last several quarters. Moreover, the company believes that the current business environment will not change significantly in the near term. Looking at the present business scenario, Aaron’s now intends to slow down the pace of opening namesake and HomeSmart stores.
Notably, the stock price gained 1.9% on Friday and closed at $30.48.
Other Stocks to Consider
Currently, Aaron’s holds a Zacks Rank #5 (Strong Sell). However, some better-ranked stocks worth considering in the retail industry include Barnes & Noble, Inc. (BKS - Snapshot Report), Christopher & Banks Corp. (CBK - Snapshot Report) and Iconix Brand Group, Inc. (ICON - Analyst Report). All of these have a Zacks Rank #1 (Strong Buy).