Rent-A-Center has made a move to increase its share of the $20 billion-plus virtual rent-to-own market.
The company announced that it has entered into a definitive agreement to acquire “substantially all of the assets” of Merchants Preferred, a nationwide provider of virtual rent-to-own services for non-prime customers. The deal, which consists of $28 million in cash and a minimum of 701,918 shares of Rent-A-Center common stock, is valued at approximately $47.5 million.
Rent-A-Center owns and operates approximately 2,200 stores in the United States, Mexico and Puerto Rico. It also operates 1,100 “Acceptance Now” kiosk locations, which, similar to Merchants Preferred, provide rent-to-own financing for people with slim or poor credit profiles.
Rent-A-Center said the acquisition is expected to accelerate the expansion of Acceptance Now’s virtual rent-to-own offering and provide a scalable and seamless solution to capture additional share in the market. Expanding Merchants Preferred’s and Acceptance Now’s existing relationships with its retail partners will be a top priority for Rent-A-Center.
“The addition of the Merchants Preferred technology platform and its approximately 2,500 locations enables us to accelerate our expansion plans with respect to the company’s virtual rent-to-own capabilities by at least 18 months,” said Mitch Fadel, CEO of Rent-A-Center. “We are also excited to add the capabilities of the experienced Merchants Preferred management team. This acquisition positions us for growth and differentiates us from competitors, allowing us to offer both virtual and staffed solutions to our retail partners.”
The acquisition, unanimously approved by Rent-A-Center’s board, is expected to close in the third quarter.