Vintage Capital Reacts to Aaron's Rejection
Vintage Capital Management LLC, the second largest shareholder of the rent-to-own retailer Aaron’s Inc. (AAN), came up with the much awaited reaction on Friday after facing rejection for the fourth time in acquiring Aaron’s.
The owner of nearly 10% of Aaron’s shares 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. Further, Vintage Capital remains unimpressed by Aaron’s action of suing the former in order to prevent one of its largest shareholders from voting at the upcoming annual meeting.
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.
As a sequel, 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 three 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 lost 1.4% on Thursday and closed at $29.41.
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).
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Read the Full Research Report on ZLC
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