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Rent-A-Center gets increased acquisition offer

An interested party has upped the ante for Rent-A-Center.

Hours after the company announced it had ended its strategic and financial alternatives review and concluded a sale was not in its best interests, the retailer issued a statement in which it said it received an increased offer to acquire the company from one of the parties that has been involved in the process.

"The [offer] letter was not accompanied by equity commitment letters that would be necessary for the company to evaluate whether to enter into an agreement with an acquisition entity possessing no assets," Rent-A-Center stated.

The rent-to-own retailer said its board would carefully consider any credible proposal with the assistance of its advisors.

Hours before issuing the statement, Rent-A-Center announced it had completed its strategic review and said it did not receive any proposals that met the objectives for a sale.

“Our Board conducted a thorough review of alternatives for our business, and unanimously determined that the execution of our strategic plan remains the best opportunity to deliver value to our stockholders compared to the alternatives available to us,” said J.V. Lentell, chairman, Rent-A-Center. “As demonstrated by our updated financial outlook and key operating metrics for April and May, the company’s strategic plan is already delivering substantial results and Rent-A-Center is well-positioned to generate value for all stockholders.”

In the same announcement, the retailer said it would “continue to regularly review opportunities to drive value on behalf of our stockholders.” It also noted that its cost reduction initiatives are significantly ahead of schedule, “and we expect to generate over $100 million in annual run-rate savings and realize approximately $70 million in savings in 2018.”

Rent-A-Center, which operates some 2,400 stores in the United States, Mexico, Puerto Rico and Canada, has been under pressure from its shareholders Engaged Capital and Marcato Capital to sell itself. It rejected buyout offers last summer.
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