Aaron's Lifts Charges Against Vintage Capital - Analyst Blog

Rent-to-own retailer Aaron's Inc. AAN yesterday lifted litigation charges filed against Vintage Capital Management LLC following the latter's decision to withdraw its takeover bid to acquire the former. Aaron's had sued Vintage Capital to force it to disclose details of its financing for the proposed buyout.  

Vintage Capital, the second largest shareholder of Aaron's with nearly 10% stake in the company, withdrew from its previously offered $30.50 per share or $2.3 billion bid to acquire Aaron's as it expressed its disappointment in the latter's decision to buy Progressive Finance in addition to the continued distressed performance.

Vintage Capital had made a bid to acquire all shares of Aaron's in February this year quoting the aforementioned buyout offer that was priced at nearly a 12.7% premium to the latest closing price of Aaron's shares on that day. Further, the private equity firm's offer incorporated an option to raise the buyout price after negotiating with Aaron's management.

Subsequently, on Mar 7, Vintage Capital sent a notice to Aaron's intimating it of the nomination of five candidates to the latter's board at the Annual General Meeting AGM to be held in May. This move was a part of Vintage Capital's intention to gain a majority in Aaron's 9-member board.

Prior to the current offering, Vintage Capital had made 3 private proposals for acquiring Aaron's, which were ignored by the latter. Thereafter, the investment firm increased its shareholding to approximately 10% in the company, consequently becoming the largest stakeholder and decided to publicly disclose its offering.

Aaron's has been witnessing soft top and bottom-line performances for the last several quarters. Moreover, the company believes that the current business environment will not change significantly in the near term.

Notably, the stock price of Aaron's gained 1.6% on Monday and closed at $29.88.

Other Stocks to Consider

Currently, Aaron's holds a Zacks Rank #2 (Buy). Some better-ranked stocks worth considering in the retail industry include Barnes & Noble Inc. BKS, Rite Aid Corp. RAD and Zale Corp. ZLC. All of these have a Zacks Rank #1 (Strong Buy).