Don’t Forget to Do Your Merger

Last June, a private equity firm called Vintage Capital Management LLC agreed to buy Rent-A-Center Inc. for $15 per share (about $800 million total, $1.37 billion including debt). As is normal in public-company mergers and acquisitions, the deal could not close right away; Vintage owned another rent-to-own retailer and so there was likely to be a lengthy antitrust review. Vintage and Rent-A-Center agreed that if the deal had not closed by Dec. 17, then either party could walk away, but they also agreed that, if they were still waiting for legal approvals at that time, either side could extend this “drop-dead date” by three months (and then again by another three months). They also agreed that, if the deal was terminated on the drop-dead date because they hadn’t gotten antitrust approval, Vintage would pay Rent-A-Center a $126.5 million breakup fee.

After the deal was signed, everyone worked very hard to get it closed. They worked together on financial modeling for the deal’s financing, and to plan for the integration of Vintage’s and Rent-A-Center’s business. They made filings to the Federal Trade Commission to get antitrust approval, but as expected the FTC made a second request for more information, delaying the approval. Vintage and Rent-A-Center put out a joint press release disclosing the second request and saying that they “currently expect the Merger to close during the first quarter of 2019” — after the December drop-dead date.