Rent-A-Center (RCII) is set to acquire virtual rent-to-own services company Merchants Preferred in a $47.5 million deal. Rent-A-Center will purchase Merchants Preferred for $28 million in cash and a minimum of 701,918 shares of its common stock, which closed at $27.83 on Friday.

Rent-A-Center will purchase all of Merchants Preferred assets, which include its back-office and technology infrastructure as well as its management team . The company said the impact of the deal on its 2019 earning is not expected to be “material.”

“The success and trajectory of our strategic plan have enabled us to focus on growing our business,” Mitch Fadel, CEO at Rent-A-Center, said in a statement. “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.

“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,” he added.

Through the acquisition, Rent-A-Center will increase its Acceptance Now virtual rent-to-own offering by providing “scalable and seamless” solutions, the company said. It expects to capture more than $20 billion in market share in the virtual rent-to-own space while expanding its national retail and online partners.

The company also plans to increase its presence in new product verticals outside of its current offering of home furnishings and electronics. Rent-A-Center will also add 2,500 locations to the Acceptance Now model.

The purchase has been unanimously approved by Rent-A-Center’s board of directors. The acquisition is slated to close in the third quarter of the year.

Mann, Armistead & Epperson, Ltd. Inc is serving as the company’s financial advisor while Winston & Strawn LLP is working as Rent-A-Center’s legal advisor. Houlihan Lokey is the financial advisor for Merchants Preferred with Sullivan & Worcester LLP as the legal advisor.

Merchants Preferred was opened in 2012 in Atlanta, providing virtual rent-to-own services to “non-prime customers.”

Rent-A-Center has 2,220 stores in the U.S., Mexico, and Puerto Rico. It also operates 1,110 Acceptance Now kiosks, where it provides rent-to-own financing for consumers with poor credit history Retail Dive reported.

Shares of Rent-A-Center stock were up 0.25 percent as of 3:14 p.m. ET on Monday.

Rent-A-Center Acquistion
Rent-A-Center to acquire Merchants Preferred for $47.5 million. A woman walks past a Rent-a-Center store September 8, 2005 in Niles, Illinois. Plano, Texas-based Rent-a-Center has said it plans on closing around 162 stores by the end of this year, also stating that about 45 stores were damaged from Hurricane Katrina in Louisiana. Mississippi and Alabama. Rent-a-Center is the largest rental-retail store of its kind in the nation and has over 20 stores in the Chicago area. The manager at this Niles store said he had not heard anything about the store closings. Getty Images/Tim Boyle
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