NEWPORT BEACH, Calif.--(BUSINESS WIRE)--Engaged Capital, LLC (together with its affiliates, “Engaged Capital”) an investment firm specializing in enhancing the value of small and mid-cap North American equities with a 20.5% economic exposure to Rent-A-Center, Inc. (“Rent-A-Center” or the “Company”) (NASDAQ:RCII), today issued a statement in respect of its investment in Rent-A-Center.
Engaged Capital commends the Company’s Board of Directors (the “Board”) on initiating a long overdue strategic alternatives review process to unlock value for all stockholders. 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.
While Rent-A-Center previously failed to pursue credible bids at meaningful premiums to the prevailing stock price earlier this year, we wholly expect the Board and senior management team to earnestly pursue strategic alternatives for the benefit of all stockholders following today’s announcement. Engaged Capital is also pleased to see that the apparent impediment in the boardroom towards running a strategic alternatives process has been removed. Engaged Capital encourages the Company to expeditiously begin the due diligence process with the numerous publicly reported strategic and financial buyers that have already provided indications of interest in acquiring Rent-A-Center, beginning with the opening $15 per share bid from Buddy’s/Vintage Capital.
Engaged Capital reminds the Board that our analysis shows that a strategic acquirer could realize $300 million or more of synergies and operational improvements, as noted in our May 2, 2017 investor presentation. This analysis should provide further confidence to the Company in running a successful strategic review process.
We applaud the Rent-A-Center directors who have finally realized that evaluating strategic alternatives is the best path forward to maximizing value for all stockholders and expect that the Board will run an objective, expedient and successful process.
About Engaged Capital:
Engaged Capital, LLC (“Engaged Capital”) was established in 2012 by a group of professionals with significant experience in activist investing in North America and was seeded by Grosvenor Capital Management, L.P., one of the oldest and largest global alternative investment managers. Engaged Capital is a limited liability company owned by its principals and formed to create long-term shareholder value by bringing an owner’s perspective to the managements and boards of undervalued public companies. Engaged Capital’s efforts and resources are dedicated to a single investment style, “Constructive Activism” with a focus on delivering superior, long-term, risk-adjusted returns for investors. Engaged Capital is based in Newport Beach, California.