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Rent-A-Center Ends Merger Agreement, Vintage Capital Responds

Rent-A-Center said that the company has terminated a previously announced merger agreement plan with certain affiliates of Vintage Capital Management, LLC.

The company said it did not receive an extension notice from Vintage Capital at or prior to 11:59 p.m., Eastern Time, on December 17, 2018, which was the deadline set forth in the merger agreement for either party to provide notice to the other of its election to extend the end date in the merger agreement to March 17, 2019, due to the continued pendency of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, resulting from the previously disclosed second request received by the parties from the Federal Trade Commission in connection with the pending transaction.

In light of the current financial and operational performance of the company, the board of directors of Rent-A-Center determined not to exercise its right to extend the end date and instead elected to exercise the company’s right to terminate the merger agreement.

Accordingly, Rent-A-Center said it notified Vintage Capital of Rent-A-Center’s termination of the merger agreement and noted Vintage Capital’s obligation under the terms of the agreement to pay the company a reverse breakup fee of $126.5 million within three business days.

Vintage Rodeo Parent, an affiliate of Vintage Capital Management, had announced plans to acquire Rent-A-Center in June 2018.

Update: Vintage Capital subsequently issued its own statement concerning the actions of Rent-A-Center, stating, “Rent-A-Center’s purported termination of our merger agreement is invalid. Vintage believes that the merger agreement remains in effect and that Rent-A-Center’s actions constitute a further material breach of the merger agreement. Vintage intends to pursue all available remedies against Rent-A-Center.”

Vintage Capital is a private and public equity investor specializing in the consumer, aerospace and defense, and manufacturing sectors. Vintage is the controlling shareholder of Buddy’s Newco LLC d/b/a Buddy’s Home Furnishings, a privately-held rent-to-own company with over 300 locations across the U.S. and Guam.