Rent-A-Center Announces Agreement to Acquire Rent Rite
PLANO, Texas--(BUSINESS WIRE)--April 28, 2004--Rent-A-Center, Inc. (Nasdaq/NNM:RCII) (the "Company"), the leading rent-to-own operator in the United States, announced today that it has entered into a definitive agreement to acquire Rent Rite, Inc. d/b/a Rent Rite Rental Purchase ("Rent Rite"), an operator of 90 rent-to-own stores in 11 states and one of the largest private rent-to-own companies in the United States.
Pursuant to the definitive agreement, the Company has agreed to acquire Rent Rite for 12.75 times Rent Rite's average three month recurring revenue, or approximately $58.4 million based on Rent Rite's recurring revenue for January through March 2004. The purchase price includes the debt and other liabilities of Rent Rite. Approximately one half the purchase price will be paid in the Company's common stock, with the remaining portion consisting of cash, the assumption of Rent Rite's stock options and retirement of Rent Rite's outstanding debt.
"We are excited about this transaction with Rent Rite," commented Mark E. Speese, the Company's Chairman of the Board and Chief Executive Officer. "Lead by Ed Stanko and his executive management team, the Rent Rite organization has established itself as one of the largest and most effective rent-to-own companies in its brief six year history. We are delighted to add these talented and motivated employees to the Rent-A-Center team," Speese added. "We believe the anticipated enhancements and improvements represented by the integration of Rent Rite's significant store base into our system through the application of our proven business model constitutes a promising opportunity to create additional value for our stockholders. We believe this transaction, following an initial transition period, will increase our operating profits in 2005 by approximately $10 million," Mr. Speese said.
The Company intends to fund the cash portion of the acquisition primarily with cash on hand. The acquisition, which is expected to be completed in early May 2004, is conditioned upon customary closing conditions for a transaction of this nature, including the receipt of requisite approval from Rent Rite's shareholders.
The Company anticipates repurchasing a number of shares commensurate with the number of shares of common stock being issued in the acquisition of Rent Rite pursuant to its previously announced stock repurchase program, subject to market conditions and applicable regulatory requirements.
Rent-A-Center, Inc., headquartered in Plano, Texas, currently operates 2,673 company-owned stores nationwide and in Canada and Puerto Rico. The stores generally offer high-quality, durable goods such as home electronics, appliances, computers, and furniture and accessories to consumers under flexible rental purchase arrangements that generally allow the customer to obtain ownership of the merchandise at the conclusion of an agreed-upon rental period. ColorTyme, Inc., a wholly owned subsidiary of the Company, is a national franchiser of approximately 322 rent-to-own stores, 310 of which operate under the trade name of "ColorTyme," and the remaining 12 of which operate under the "Rent-A-Center" name.
This press release contains forward-looking statements that involve risks and uncertainties. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "could," "estimate," "should," "anticipate," or "believe," or the negative thereof or variations thereon or similar terminology. Although the Company believes that the expectations reflected in such forward-looking statements will prove to be correct, the Company can give no assurance that such expectations will prove to have been correct. The actual future performance of the Company could differ materially from such statements. Factors that could cause or contribute to such differences include, but are not limited to: (i) the ability of the Company to successfully integrate the acquired stores into the Company's operating system, (ii) the Company's ability to enhance the performance of the acquired stores, (iii) the ability of the parties to close the transaction in the time period currently anticipated, (iv) the receipt by Rent Rite of third party consents, (v) the satisfaction of the closing conditions to the transaction and (vi) the other risks detailed from time to time in the Company's SEC filings, including but not limited to, its annual report on Form 10-K/A for the year ended Dec. 31, 2003. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, the Company is not obligated to publicly release any revisions to these forward-looking statements to reflect the events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.
CONTACT: Rent-A-Center, Inc., Plano
David E. Carpenter, 972-801-1214
dcarpenter@racenter.com
or
Robert D. Davis, 972-801-1204
rdavis@racenter.com
or
Mitchell E. Fadel, 972-801-1114
mfadel@racenter.com
or
Mark E. Speese, 972-801-1199
mspeese@racenter.com
SOURCE: Rent-A-Center, Inc.