Vintage Capital launches hostile $2.3-bn bid for US rental chain Aaron's

Private equity firm Vintage Capital Management yesterday launched an unsolicited $2.3-billion bid to buy US electronics and furniture rental chain Aaron's Inc.

Florida-based Vintage Capital, the largest shareholder in Aaron's with 9.5 per cent stake, has offered to pay $30.50 per share, a premium of 12.8 per cent to Aaron's Thursday closing price.

Aaron's today said that its board of directors has been informed of an unsolicited offer to acquire the company and it will evaluate the offer in line with its fiduciary duties.  It also added that the company is not currently in discussions with any party regarding any offer.

Aaron's share price rose to $32.27 in early trading yesterday, but closed at $28.32.

With a market cap of $2.1 billion and annual sales of $2.2 billion, Atlanta-based Aaron's is one of the largest lease-to-own rental chains dealing in residential and office furniture, consumer electronics, home appliances and accessories.

Founded in 1955 by entrepreneur Charles Loudermilk Sr, Aaron's, which has been publicly traded since 1982, has more than 1,800 company-operated and franchised stores in 48 states and Canada.

The company offers products of various brands, such as JVC, Mitsubishi, Panasonic, Sony, Hewlett-Packard, Simmons, Frigidaire, LG, Samsung, and Sharp.

In a letter to Aaron's board, Vintage Capital, which also is majority owner of Buddy's Home Furnishings, a rent-to-own business, said that it had submitted three separate offers since 2011 to buy the company, but each of its offers was summarily ignored by the board.

"During this time, Aaron's stock has performed poorly while general stock market indices have appreciated significantly," Vintage Capital said in its letter.