Rent-A-Center [$RCII] shares elevated 10% in Monday trading after the lease-to-own provider disclosed it had entered into a definitive agreement to acquire Acima Holdings LLC, a fintech company in the lease-to-own space. Total analysis for the deal totals at $1.65 billion, including $1.273 billion in cash and 10.8 million shares of Rent-A-Center common stock currently valued at $377 million.
Rent-A-Center has also received a $1.825 billion debt financing obligation from J.P. Morgan, Credit Suisse and HSBC Securities. Acima was pioneered in 2013 in Salt Lake City and has grown to expected annual revenue of $1.25 billion in 2020. The Acima team will continue to conduct business out of the Salt Lake City office when the deal has closed. “From a financial standpoint, we expect the deal to be immediately accretive to adjusted EPS upon closing,” said Mitchell Fadel, CEO of Rent-A-Center. “Now, looking forward, we expect Acima to drive double-digit accretion to adjusted earnings per share in year one, with potential for more accretion in year two.”
Rent-A-Center says the deal sets up the company to cash in on the growing digital business. “In the past, we’ve spoken to an addressable market for virtual lease-to-own in the US of over $25 billion,” said Jason Hogg, Rent-A-Center’s executive vice president for preferred leasing. “We’re updating that to $40 billion to $50 billion today as we believe our strategy to support a marketplace for consumer brands across stores and e-commerce increases the opportunity.” Rent-A-Center stock is up 37% in 2020 while the S&P 500 is up 14.8% YTD. The IPO’s Just Keep Coming, This Time It’s Poshmark