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Rent-A-Center Rises on Deal to Buy Online Peer Acima for $1.6B

Rent-A-Center stock traded higher Monday after the company said it agreed to buy online lease-to-own provider Acima Holdings for $1.6 billion.

Rent-A-Center  (RCII) - Get Rent-A-Center Inc Report shares were higher on Monday a day after the company said it agreed to buy online lease-to-own provider Acima Holdings in a deal valued at more than $1.6 billion in cash and stock.

Shares of the Plano, Texas, company at last check rose 11% to $39.11.

The terms call for Rent-A-Center to pay $1.27 billion cash and 10.8 million common shares currently valued at $377 million.

The deal is expected to close in the first half, subject to conditions including antitrust clearance.

"Founder Aaron Allred and his team have created a leading virtual [lease-to-own] solution for retailers and consumers," Rent-A-Center Chief Executive Mitch Fadel said in a statement.

"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." 

After the transaction closes, Acima will become a part of Rent-A-Center's digital platform, Preferred Dynamix. Its top executives will report to the platform's vice president, Jason Hogg.

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Acima will continue to operate from Salt Lake City, where it was founded in 2013. 

Rent-A-Center serves credit-constrained customers, providing home furnishings, appliances and electronics on a lease-to-own basis. 

The company has 1,950 stores in the U.S. including Puerto Rico, and in Mexico, plus 460 franchise locations.

"This combination marries Acima’s advanced decisioning with Preferred Dynamix’s complementary and proprietary digital platform," said Hogg.

"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," he added.

Acima operates with partners in more than 15,000 retail locations and e-commerce platforms. The company is expected to take in about $1.25 billion of revenue in 2020 and post $225 million of adjusted earnings before interest, taxes, depreciation and amortization, Rent-A-Center said.

Acima's Allred estimated that more than 60 million consumers in the U.S. either don't have a bank account or have one but still rely on alternative financial services.

Rent-A-Center said it obtained $1.83 billion in debt-financing commitments from JPMorgan Chase, Credit Suisse and HSBC.