Aaron's Acquires Progressive in Move to Transform Business
April 15, 2014,
ATLANTA-Rent-to-own retailer Aaron's has purchased Progressive Finance Holdings from equity firm Summit Partners, gaining an entry in what the company described in a statement as the "virtual rent-to-own" market.
Progressive is a provider of virtual lease-to-own programs, offering point-of-sale lease and purchase programs to shoppers who don't qualify for more traditional financing. According to the statement, Progressive's software provides automated lease processing within a store, without the need for specialist in-store personnel.
The all-cash transaction is valued at about $700 million. Aaron's will operate Progressive as a wholly owned subsidiary, and John Robinson, Progressive's CEO, has joined the Aaron's executive team as executive vice president and CEO of Progressive.
In a letter to Aaron's shareholders, CEO Ron Allen and Chairman Ray Robinson said the Progressive acquisition is an important step in the retailer's effort to reposition itself and evolve in the face of changes in the competitive landscape. "Like many industries, the RTO space has been transformed by the Internet and virtual marketplace," the letter said. "Aaron's board and management team have been focused on leveraging our leading national footprint, and strong brand and market expertise to address the growing virtual RTO customer base."
For the past year, the letter added, Aaron's board and management have been reviewing the company's core business, strategic options and corporate governance. This included an evaluation of a proposal by Vintage Capital Management, which owns about 10 percent of Aaron's common stock, to acquire the retailer outright for $30.50 a share. Aaron's rejected the proposal because "Vintage was unwilling to provide customer visibility into its ability to finance the transaction, including the source of the equity funding it would need to complete a transaction."
In a separate statement, Aaron's said same-store sales and customer growth for its fiscal first quarter fell by 2 percent each in its company-operated stores, and that franchised stores also experienced declines in same-store sales and customer growth. In this statement, Allen said adverse weather affected the stores during the quarter, along with the difficulties in the macroeconomic environment.