Rent-A-Center Inc. (NASDAQ/NGS: RCII), one of the nation’s largest rent-to-own store operators, announced plans to consider options including a sale of the chain which operates approximately 2,500 stores in the U.S., Mexico, Canada and Puerto Rico.
The Plano, TX-based company also announced that its chairman, Steven L. Pepper, resigned from his position effective today. Pepper informed the company that his resignation was a result of his disagreement with the board’s decision to initiate a strategic review process for the retailer.
Engaged Capital, a Newport Beach investment firm with a sizable stake in the company, commended the board’s decision calling it long overdue.
“Engaged Capital believes that Rent-A-Center remains an attractive acquisition opportunity. We believe the company’s strong cash flow generation, liquidity and leadership position in the attractive rent-to-own industry combine to underpin potential transaction price ranges that would allow both stockholders and a potential acquirer to realize significant value,” the company said.
Engaged Capital also claimed Rent-A-Center previously failed to pursue credible bids at meaningful premiums to its stock price earlier this year, adding, “Engaged Capital reminds the board that our analysis shows that a strategic acquirer could realize $300 million or more of synergies and operational improvements.”
The firm has engaged J.P. Morgan as its financial advisor and Winston & Strawn LLP as legal advisor. Rent-A-Center reported a loss this week the three months ended Sept. 30 of $12.6 million vs a $6.2 million profit for the same quarter last year.