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Rent-A-Center to Acquire Rent Rite
PLANO, Texas -- Rent-A-Center Inc. has entered into a definitive agreement to acquire Rent Rite Inc., which does business as Rent Rite Rental Purchase, an operator of 90 rent-to-own stores in 11 states and one of the largest private rent-to-own companies in the United States.In February, Rent-A-Center announced an agreement to purchase the Canfield, Ohio-based Rainbow Rentals (read story).The agreement with Rent Rite calls for Rent-A-Center to acquire Rent Rite for 12.75 times Rent Rite's average three month recurring revenue, or approximately $58.4 million based on recurring revenue for January through March 2004. The purchase price includes the debt and other liabilities of Rent Rite. Approximately half the purchase price will be paid in Rent-A-Center's common stock, with the remaining portion consisting of cash, the assumption of Rent Rite's stock options and retirement of Rent Rite's outstanding debt."We believe the anticipated enhancements and improvements represented by the integration of Rent Rite's significant store base into our system through the application of our proven business model constitutes a promising opportunity to create additional value for our stockholders," says Mark E. Speese, chairman and chief executive officer of Rent-A-Center. "We believe this transaction, following an initial transition period, will increase our operating profits in 2005 by approximately $10 million."The company intends to fund the cash portion of the acquisition primarily with cash on hand. The acquisition, which is expected to be completed early next month, is conditioned upon customary closing conditions for a transaction of this nature, including the receipt of requisite approval from Rent Rite's shareholders.Rent-A-Center anticipates repurchasing a number of shares commensurate with the number of shares of common stock being issued in the acquisition of Rent Rite pursuant to its previously announced stock repurchase program, subject to market conditions and applicable regulatory requirements.Rent-A-Center Inc. currently operates 2,673 company-owned stores nationwide and in Canada and Puerto Rico. "