Aaron raises stake in Rainbow Rentals to 8%
By Furniture Today Staff -- Furniture Today, January 26, 2003
Atlanta — Aaron Rents has increased its stake in rent-to-own competitor Rainbow Rentals to 8% with a $706,725 purchase of common stock.
Aaron bought 174,500 Rainbow shares for $4.05 on Jan. 17, boosting its stake by three percentage points. Last year the company purchased two blocks of 150,000 shares for a combined price of $1.4 million.
In a Securities and Exchange Commission document, Aaron, which operates more than 700 RTO and rent-to-rent stores in the United States and Puerto Rico, said it wants to establish an equity position significant enough to encourage Rainbow to consider it "a potential acquiror or strategic partner."
Wayland Russell, chairman of Canfield, Ohio-based Rainbow Rentals, has maintained since Aaron's first purchase that Rainbow is not interested in selling and that no one from Aaron has extended an offer. He noted that three key Rainbow executives control 56% of Rainbow's shares.
While Rainbow's stock has declined, Russell said the 122-store chain is in good financial shape with about $6 million in debt and a credit line of $25 million at "very favorable terms."
Aaron Chairman and Chief Executive Officer Charlie Loudermilk said the Rainbow purchase is a good investment even if no acquisition occurs.
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Aaron Rents takes small stake in RTO rival
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