Rent-A-Center to acquire Rent Rite
Joan Gunin -- Furniture Today, May 3, 2004
PLANO, Texas — PLANO, Texas— Rent-A-Center has agreed to acquire Rent Rite, a privately held Boca Raton, Fla.-based operator of 90 rent-to-own stores in 11 states.
Rent-A-Center, the largest U.S. RTO operator, expects to close in early May on a deal to buy the chain for $58.4 million, equal to about 12.75 times Rent Rite's average three-month recurring revenue.
About half the purchase price will be paid in Rent-A-Center stock and the rest in cash.
Rent-A-Center said the deal should add about $10 million to its annual operating profits by 2005.
"We are excited about this transaction with Rent Rite," said Mark E. Speese, chairman and CEO of Rent-A-Center. "Rent Rite has established itself as one of the largest and most effective rent-to-own companies in its brief six-year history. We are delighted to add these (500) talented and motivated employees to our team."
Ed Stanko, Rent Rite's chairman and CEO, will step down.
The 90 Rent Rite stores are in Connecticut, Delaware, Florida, Georgia, Indiana, Maryland, Massachusetts, Pennsylvania, Rhode Island, South Carolina and Virginia. Of those, 66 are in Florida, Georgia, Indiana and Pennsylvania.
Rent-Rite is the second major acquisition Rent-A-Center has announced this year. The company expects to close in mid-May on a $100 million all-cash deal to acquire Rainbow Rentals, the 125-store chain based in Canfield, Ohio.
The company also just announced its entry into Canada, with the recent acquisition of five Budget Rental Centres, including three stores in Calgary, Alberta, and two units in Edmonton, Alberta.
"Over the next several years we could have a couple of hundred stores in the Canadian market," Speese said.
Rent-A-Center has 2,673 company-owned stores and another 322 in its ColorTyme franchised-store subsidiary.
