Rent-A-Center Acquires The Rental Store

December 27, 2010  by in UnCategorized   

By Home Furnishings Business in Acquisition on December 28, 2010

Rent-to-own retailer Rent-A-Center (NASDAQ-NGS: RCII) announced it acquired consumer finance provider The Rental Store last week.

Plano, Texas-based Rent-A-Center acquired The Rental Store for $75.5 million, primarily with cash on hand, on a debt free basis, using a portion of the purchase price to pay off all of TRS' existing debt.

The Rental Store is a leading provider of consumer lease-purchase financing through third-party retail furniture and electronics retailers, operating approximately 145 kiosk locations.

"We are very excited about adding TRS to our RAC Acceptance business which we believe significantly accelerates the expansion of this growth initiative and increases our opportunities for further growth in this area," said Rent-A-Center Chairman and CEO Mark E. Speese. "In addition, given our track record of successfully integrating acquisitions, we believe this transaction will create additional value for our stockholders, adding approximately $100 million in revenue and $15 million in operating income next year."

In addition, Rent-A-Center announced that it has sold a majority of its customer accounts at approximately 207 financial services store locations. The company also announced it will close seven financial services store locations in Montana on Dec. 31 as a result of state law changes enacted in the November general election. The guidance for fiscal year 2011 previously provided by the company in its earnings release dated Oct. 25 included approximately $72 million in revenue and $11 million in operating income attributable to its financial services business.

"As we transition our financial services operations, we are pleased to have additional resources to deploy against the exciting growth initiatives outlined at our Investor Day conference in November," Speese added. "We believe the acquisition of TRS demonstrates our commitment to fully realizing the strategic opportunities available to us today."

Rent-A-Center currently operates approximately 3,000 company-owned stores nationwide and in Canada, Puerto Rico, and Mexico. The stores generally offer major consumer electronics, appliances, computers and furniture and accessories under flexible rental purchase agreements 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 200 rent-to-own stores operating under the trade name of "ColorTyme."