Rent-a-Center shares soar after rejecting takeover bid

Rent-A-Center shares soared 8.9 percent to $12.09 on Tuesday after it was revealed that the rent-to-own chain had rejected a $15 a share takeover bid from a Florida private equity firm.

The Plano, Texas, retailer called the offer from Vintage Capital “inadequate and opportunistic.”

While many investors cheered the move by Rent-a-Center, one investor, activist hedge fund Engaged Capital, was not pleased.

“The Board’s response is troubling on many levels and we hope it does not reflect a continued view of entrenchment and loyalty to the founder as opposed to the shareholders,” Engaged Capital said in a statement after a regulatory filing by the retailer revealed its rejection of the $800 million offer.

Engaged Capital won three seats on RAC’s board last month and has been pushing for the company to sell itself.

It said it was “pleased” to see Vintage’s offer come in at a “significant premium” to the company’s stock price.

RAC shares have been trading largely between $10 and $12 since April — and below that range earlier in the year. Its sales have been slumping and it recently said it would raise the quality of the goods it rents in hopes of turning thongs around.

The disagreement between the retailer and the hedge fund is not the first time the two have not seen eye-to-eye.

On June 19 Engaged accused RAC of “dragging their feet” when it came to onboarding the Engaged-nominated directors. The hedge fund also slammed Chairman Steve Pepper for taking a two month vacation.

Reps for Vintage Capital did not respond to requests to comment.