ATLANTA, July 29, 2020 /PRNewswire/ -- Aaron's, Inc.
(the "Company") (NYSE: AAN), a leading omnichannel provider of
lease-purchase solutions, today announced that it intends to
separate into two independent, publicly-traded companies:
Progressive Leasing ("Progressive") and the Aaron's Business
("Aaron's"). Both companies are expected to benefit from improved
strategic focus, market-leading positions, strong free cash flow
generation and well-capitalized balance sheets, enabling each to
unlock substantial value creation opportunities. The
separation is planned as a tax-free spin-off of Aaron's to the
Company's shareholders and is expected to be completed by the end
of the year.
"I'm proud that we have built two strong businesses, both of
which are well-positioned for long-term success as independent
companies," said John Robinson,
President and Chief Executive Officer of Aaron's, Inc. "The Board
and management team believe that separating Progressive and Aaron's
will enhance long-term shareholder value and is the next logical
step in the evolution of our organization."
The proposed transaction will create two highly focused
companies:
Progressive: With approximately $2.2 billion of revenue in 2019, Progressive will
be comprised of the Company's current Progressive business segment
as well as Vive Financial. As a standalone company,
Progressive will be well-positioned for continued strong growth
by:
- Investing in innovative technologies
- Growing existing retail partnerships
- Attracting new retail partner opportunities in a large
addressable market
- Maintaining an attractive financial profile driven by a
capital-efficient business model in a high-growth market
Aaron's: With approximately $1.8
billion of revenue in 2019, Aaron's will be comprised of
approximately 1,400 company-operated and franchised stores in 47
U.S. states and Canada, the
e-commerce platform Aarons.com, and Woodhaven Furniture Industries
("Woodhaven"). As an established leader in the lease-to-own
industry, Aaron's will be well-positioned to:
- Execute its strategic priorities, including its real estate
repositioning and digitally-enabled omnichannel strategies
- Provide compelling customer value proposition driven by
competitive pricing, high approval rates and local servicing
advantages
- Maintain an attractive financial profile including future
earnings growth and positive free cash flow
Leadership and Governance
Steve Michaels, the Company's
Chief Financial Officer and President of Strategic Operations, has
been appointed Chief Executive Officer of the Company's Progressive
Leasing business segment, effective July 31,
2020, succeeding Ryan
Woodley. Mr. Michaels has been instrumental in building and
positioning the Company for long-term success. Importantly, he led
the 2014 acquisition of Progressive and has worked closely with
that team for the last several years. Mr. Woodley will serve as an
advisor to Progressive to ensure a seamless transition.
Blake Wakefield, President and
Chief Revenue Officer of the Progressive Leasing business segment,
who has been instrumental in the growth of Progressive Leasing and
the development of its retail partner portfolio, will continue to
serve in that capacity. Both Messrs. Michaels and Wakefield will
continue to serve in their respective capacities following
completion of the separation.
Also, effective July 31, 2020,
Douglas Lindsay, President of the
Company's Aaron's Business segment, will become Chief Executive
Officer of the Aaron's Business, and Steve
Olsen, Chief Operating Officer of the Aaron's Business, will
become President of the Aaron's Business. Messrs. Lindsay and Olsen
have been the primary architects of the Aaron's Business
transformation, including its merchandising, real estate and
technology strategies. Both Messrs. Lindsay and Olsen will continue
to serve in their respective capacities following completion of the
separation.
John Robinson, President and
Chief Executive Officer of Aaron's, Inc., will continue in his
current role and will oversee the separation. He is expected to
depart from his day-to-day role at the Company upon the earlier of
completing the separation or December 31,
2020 and is expected to serve as Chairman of Aaron's.
Ray Robinson, who currently serves
as the Company's Chairman, is expected to serve as Chairman of
Progressive following the separation.
Kelly Wall, Senior Vice President
of Finance and Treasurer of Aaron's, Inc., will serve as Interim
Chief Financial Officer of the Company until the separation has
been completed.
"I am pleased to have Steve and Douglas lead Progressive and
Aaron's to ensure the continued innovation, growth and value
creation of these two great businesses," said John Robinson. "Their experience and expertise
have been critical to me over the last several years. I look
forward to working with them as we complete the separation and
continuing to work with Douglas in my role as Chairman of Aaron's
after the separation."
Mr. Robinson continued, "On behalf of the Board and management
team, I would like to thank Ryan
Woodley for his outstanding leadership of Progressive over
the past five years and his willingness to continue to serve in an
advisory capacity during this transition. During his tenure as CEO,
Progressive has quadrupled in size and generated remarkable growth
for our Company. Without his contributions, this value-creating
opportunity would not have been possible. We wish Ryan and his
family all the best and appreciate his continuing support of
Progressive."
Additional management team and board member appointments for
both companies will be announced prior to the separation.
Until the planned separation has been completed, the Company
expects to continue to pay its regular quarterly cash dividend.
Each business will set its own dividend policy following the
separation.
Transaction Details
The transaction is expected to be completed by the end of 2020,
subject to customary closing conditions, including final approval
from the Company's Board of Directors, receipt of a tax opinion of
legal counsel with respect to the tax-free nature of the
separation, and effectiveness of a Form 10 registration statement
to be filed with the U.S. Securities and Exchange Commission.
The Company may, at any time and for any reason until the proposed
separation has been completed, determine not to consummate the
separation or to modify or change its terms.
Advisors
Goldman Sachs & Co. LLC is acting as financial advisor and
King & Spalding LLP is acting as legal advisor to the
Company.
Aaron's, Inc. Second Quarter Earnings
In a separate press release issued today, Aaron's, Inc. also
announced financial results for the second quarter ended
June 30, 2020.
Conference Call and Webcast
The Company will host a conference call with members of the
management team to discuss the transaction and its second quarter
earnings on July 29, 2020, at
8:30 a.m. Eastern Time. Members of
the investment community are invited to join the conference call by
dialing 844-802-2444 (U.S.) or 412-317-5137 (International) and
requesting to join the Aaron's, Inc call. In addition, the call
will be available by webcast, accessible through the Aaron's
Investor Relations page at http://investor.aarons.com/. The webcast
will be archived for playback on that same site.
About Aaron's, Inc.
Headquartered in Atlanta,
Aaron's, Inc. (NYSE: AAN), is a leading omnichannel provider of
lease-purchase solutions. Progressive Leasing provides
lease-purchase solutions through more than 20,000 retail partner
locations in 46 states and the District
of Columbia, including e-commerce merchants. The Aaron's
Business engages in the sales and lease ownership and specialty
retailing of furniture, home appliances, consumer electronics and
accessories through its approximately 1,400 Company-operated and
franchised stores in 47 states and Canada, as well as its e-commerce platform,
Aarons.com. Vive Financial, provides a variety of near-prime credit
products that are originated through federally-insured banks. For
more information, visit investor.aarons.com, Aarons.com,
ProgLeasing.com, and ViveCard.com.
Forward-Looking Statements
Statement under the Private Securities Litigation Reform Act
of 1995: Statements in this news release that are not historical
facts are "forward-looking statements" that involve risks and
uncertainties which could cause actual results to differ materially
from those contained in the forward-looking statements. Such
forward-looking statements generally can be identified by the use
of forward-looking terminology, such as "intends," "expected,"
"planned," "will," "positioned," and similar terminology.
These risks and uncertainties include factors such as (a)
uncertainties as to the timing of the separation and whether it
will be completed; (b) the possibility that various closing
conditions for the separation may not be satisfied; (c) failure of
the separation to qualify for the expected tax treatment; (d) the
risk that the Aaron's and Progressive businesses will not be
separated successfully or such separation may be more difficult,
time-consuming and/or costly than expected; (e) the possibility
that the operational, strategic and shareholder value creation
opportunities from the separation may not be achieved; (f) the
effects on our business from the COVID-19 pandemic, including its
impact on our revenue and overall financial performance and the
manner in which we are able to conduct our operations; (g)
increases in lease merchandise write-offs and the provision for
returns and uncollectible renewal payments in light of the impact
of the COVID-19 pandemic; and (h) the other risks and uncertainties
discussed under "Risk Factors" in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2019 and in the
Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 2020. Statements in this press release that are
"forward-looking" include without limitation statements regarding
the planned separation of the Aaron's and Progressive businesses,
the timing of any such separation, the expected benefits of the
separation, and the future performance of the Aaron's and
Progressive businesses if the separation is completed. You
are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this press release.
Except as required by law, the Company undertakes no obligation to
update these forward-looking statements to reflect subsequent
events or circumstances after the date of this press
release.
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SOURCE Aaron's, Inc.