Rent-A-Center Inc. (RCII) shares were dropping 16.37% to $12.08 in premarket trading Tuesday after a deal to be bought out by a private-equity firm fell through.
Shareholders of the furniture rental company were going to receive a total sum of $800 million, or $15 a share, from Vintage Capital Management. The deal was announced in June. From early June to June 19, Rent-A-Center shares moved from around $9 to $14.94 at their peak for the year as investors anticipated a nice cash inflow for the deal.
Rent-A-Center, however, said on Tuesday that "in light of the current financial and operational performance of the Company, the Board of Directors of Rent-A-Center determined not to exercise its right to extend the end date and instead elected to exercise the Company's right to terminate the Merger Agreement."
It's also possible the deal was terminate over antitrust concerns.
Rent-A-Center shares have risen 8% this year, after having risen 30% for the year before Tuesday.
Vintage Capital will have to pay a reverse break up fee to Rent-A-Center of $126.5 million within the next three business days.