Rent-A-Center Agrees to Buy Acima Holdings in $1.6 Billion Deal

Nabila Ahmed, Bloomberg News

New homes stand at the Lexington Country development in Frisco, Texas, U.S., on Saturday, Nov. 17, 2018. Hot markets are cooling fast as interest rates rise. In the great housing slowdown of 2018, shoppers are reclaiming the upper hand, after years of soaring prices that placed most inventory out of reach for many families. Photographer: Laura Buckman/Bloomberg , Bloomberg

(Bloomberg) -- Rent-A-Center Inc. is acquiring online lease-to-own provider Acima Holdings LLC in a cash-and-stock deal valued at more than $1.6 billion.

The transaction will include $1.27 billion in cash and about 10.8 million shares of Rent-A-Center common stock currently valued at $377 million, the Plano, Texas-based company said. The deal is expected to close in the first half of 2021.

Rent-A-Center serves credit-constrained customers, providing home-furnishings, appliances and electronics on a lease-to-own basis. The company has 1,950 stores in the U.S. including Puerto Rico and in Mexico, plus 460 franchise locations.

Rent-A-Center Chief Executive Officer Mitch Fadel said the two companies began talks late last year but “backed off” when the corornavirus pandemic hit. They re-engaged in October, he said.

“Once we got through the first six weeks of the pandemic and got past the initial shutdowns for businesses, demand from households, whether it be for exercise equipment, furniture, electronics or appliances, has been very strong,” Fadel said. “The impact Covid has had in accelerating e-commerce, that trend is here to stay. And tightening consumer credit has also been a positive for lease-to-own.”

Founded in 2013, Acima provides financing for rent-to-own customers. It operates with partners in more than 15,000 retail locations and e-commerce platforms and is expected to have about $1.25 billion in 2020 revenue and $225 million in adjusted earnings before interest, taxes depreciation and amortization, Rent-A-Center said. Acima will continue to operate from Salt Lake City, Utah, while being incorporated into Rent-A-Center’s Preferred Dynamix platform.

“We looked at the fintech industry and the competitive landscape out there and determined Acima was by far and away the best platform and best leadership team that we came across and it was the most complementary from a tech standpoint to our business,” said Jason Hogg, executive vice president of the Preferred Dynamix unit.

Rent-A-Center said it obtained $1.83 billion in debt financing commitments from JPMorgan Chase & Co., Credit Suisse Group AG and HSBC Holdings Plc.