Rent-A-Center Inc. is purchasing a virtual lease-to-own solutions provider.
The lease-to-own (LTO) retailer has entered into a definitive agreement to acquire Acima Holdings LLC for $1.27 billion in cash and approximately 10.8 million shares of Rent-A-Center common stock currently valued at $377 million. Total consideration for the deal is $1.65 billion.
Founded in 2013 in Salt Lake City, Acima is an LTO financial technology (fintech) with a national presence in retail partner stores and e-commerce platforms, across a broad range of product verticals. Acima’s offerings include an underwriting and decision engine, with expanding digital payment solutions and communication, along with a back-end infrastructure to support customer and LTO partner needs. Rent-A-Center will incorporate its complementary Preferred Dynamix platform into Acima, which will continue to operate out of Salt Lake City.
Acima has grown annual revenues from $97 million in 2016 to an expected $1.25 billion in 2020. Upon the closing of the transaction, the current Acima management team will report to Preferred Dynamix executive VP Jason Hogg, and the combined business will be reported in Rent-A-Center’s preferred lease segment.
“We’re excited to welcome Acima to the Rent-A-Center family,” said Mitch Fadel, CEO, Rent-A-Center. “Founder Aaron Allred and his team have created a leading virtual LTO solution for retailers and consumers. We all share a common vision to expand the virtual LTO offering across a broader set of retail partners and to meet the needs of more customers through an integrated omnichannel strategy. Acima will help us strengthen our organization, accelerate growth and increase our virtual partner base, allowing us to better serve more consumers with the flexibility of LTO.”
“This combination marries Acima’s advanced decisioning with Preferred Dynamix’s complementary and proprietary digital platform,” said Jason Hogg, executive VP, Preferred Dynamix. “The resulting set of fintech capabilities will support faster innovation, allowing us to bring aspirational brands to consumers across a broader set of e-commerce and retail partners.”
Rent-A-Center will retain core Acima management, including its national sales structure. The transaction is expected to close in the first half of 2021, subject to customary closing conditions. Rent-A-Center has obtained $1.825 billion in debt financing commitments from J.P. Morgan Securities LLC, Credit Suisse and HSBC Securities (USA) Inc.
J.P. Morgan Securities LLC is serving as lead financial advisor; Credit Suisse is serving as an additional financial advisor and Sullivan & Cromwell LLP is serving as legal counsel to Rent-A-Center. FT Partners is serving as sole strategic and financial advisor and Wachtell, Lipton, Rosen & Katz is serving as legal counsel to Acima.