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Starboard Sends Letter to Board of Aaron's, Has Withdrawn Slate of Nominees, Says Will Support Vintage Panel


Starboard Value LP (together with its affiliates, "Starboard"), a shareholder of Aaron's, Inc. ("Aaron's" or the "Company") (NYSE: 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  Starboard also announced that it has withdrawn its nomination of a slate of highly qualified candidates for election to the Board at the Company's 2014 Annual Meeting of Shareholders (the "Annual Meeting")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.


Peter A. Feld Managing Member Starboard Value LP


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