Starboard Value LP (together with its
affiliates, "Starboard"), a shareholder of Aaron's, Inc. ("Aaron's" or the
"Company") AAN, today announced that it has delivered a letter to the
Company's Board of Directors (the "Board") expressing its extreme
disappointment with the Board's actions over the past several months,
including egregious board and management entrenchment, poor corporate
governance, and a general disdain for shareholders' best interests. Starboard
also announced that it has withdrawn its nomination of a slate of highly
qualified candidates for election to the Board at the Company's 2014 Annual
Meeting of Shareholders (the "Annual Meeting") and that it intends to support
Vintage Capital's director nominees at the Annual Meeting.
The full text of the letter to the Board follows:
May 6, 2014
Aaron's, Inc.
309 E. Paces Ferry Road, N.E.
Atlanta, Georgia 30305-2377
Dear Members of the Board,
As shareholders of Aaron's, Inc. ("Aaron's" or the "Company"), we are writing
to express our extreme disappointment with the actions you have taken over the
last several months. These actions, when viewed collectively, paint a picture
of egregious board and management entrenchment, poor corporate governance, and
a disdain for your shareholders. Even more concerning is the fact that such
egregious actions have occurred while the financial performance of Aaron's
core business continues to deteriorate rapidly as evidenced by last quarter's
results, which yielded a 3.7% decline in same-store-sales and a 20.8%
year-over-year decline in earnings-per-share. Simply put, these results are
unacceptable.
We are also deeply concerned with the recently announced acquisition of
Progressive Finance Holdings, LLC ("Progressive"). In light of the Company's
recent poor operating results, we do not believe the current management team
and Board of Directors (the "Board") have earned the trust of shareholders to
execute on a transaction of this scale. If the Company cannot operate its own
core business effectively, how can we trust that it can execute and meet the
lofty growth expectations for Progressive that would be required to justify
the valuation?
Further, we strongly question the motivations for this transaction in light of
the Company's clear desire to spurn the acquisition offer from Vintage Capital
Management LLC ("Vintage") earlier this year. It is inexcusable for the
Company to seek to consummate a sizable transaction with Progressive without
first fully evaluating all strategic alternatives to maximize shareholder
value, including Vintage's offer to acquire the Company. The Board has
summarily rejected an opportunity to negotiate a transaction that could
provide immediate full and fair value to the Company's shareholders. We
believe the members of the Board have failed to fulfill their fiduciary duties
to shareholders and, instead, have acted out of self-interest in seeking to
preserve your positions on the Board.
Given our substantial concerns with the Company's deteriorating financial
performance, poor corporate governance, and entrenchment tactics, on March 6,
2014, Starboard privately nominated a slate of highly-qualified director
candidates for election to the Board at the 2014 Annual Meeting of
Shareholders (the "Annual Meeting"). In light of the fact that Vintage, a 10%
shareholder of the Company, has also nominated a slate of directors for
election at the Annual Meeting and has filed preliminary proxy materials in
support of its nominees, we are hereby withdrawing our nomination notice and,
instead, intend to support Vintage's director nominees. We believe the
Vintage nominees are highly qualified, will bring credibility and
accountability to the Board, and will ensure that shareholder interests are
fully represented.
We will continue to monitor the Company's progress and hope that management
and the Board will begin to recognize their responsibility to represent us,
the shareholders and true owners of Aaron's.
Respectfully,
Peter A. Feld
Managing Member
Starboard Value LP
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