Aaron's uses debt facility, notes to fund acquisition of Progressive

By Lisa Kerner

Charlotte, N.C., April 15 - Aaron's, Inc. announced it has acquired Progressive Finance Holdings, LLC from Summit Partners in an all-cash transaction valued at about $700 million.

The transaction was financed through a combination of $200 million of cash on hand, a $126 million senior debt facility, $300 million of private placement notes and a revolving credit facility draw, according to Aaron's chief financial officer Gil Danielson.

The weighted cost of the new financing is 4.1%, Danielson said during a conference call to discuss the transaction details on Tuesday.

Aaron's expects the transaction to be double-digit accretive to cash earnings per share in 2014 and significantly more accretive in 2015.

Progressive will operate as a wholly owned subsidiary of Aaron's, providing Aaron's with "an important entry point" into the growing virtual rent-to-own market, according to a news release.

John Robinson, Progressive's chief executive officer, will join the Aaron's executive leadership team as executive vice president and CEO of Progressive, reporting directly to Ronald W. Allen, Aaron's CEO.

Allen called the acquisition "highly complementary and transformative" for Aaron's. The company will benefit from Progressive's proprietary decision engine technology, an expanded customer base and knowledgeable management team, he said.

"Today's announcement is the culmination of discussions that began in May of last year and is consistent with the views we have heard from the investment community," Allen said.

Aaron's is an Atlanta-based sales and lease ownership company and specialty retailer of consumer electronics, computers, residential and office furniture, household appliances and accessories. Progressive is a merchandise lease-to-own company based in Draper, Utah.

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