ORLANDO - Vintage Capital Management has nixed its $2.3 billion buyout offer of Aaron's Inc. stock not already owned by the investment firm. However, Vintage Capital stated, it will proceed with plans to gain a majority of seats on the rental firm and furniture manufacturer's board. 

In an April 17 letter to Aaron's board, Vintage Capital cited Aaron's recent acquisition of Progressive Finance and its continued poor performance for its withdrawal of the offer. Aaron's announced the acquisition of the virtual lease-to-own firm on April 15.

The letter from Brian Kahn, managing member at Vintage Capital, states in part: "Your decision to reject our offer and instead spend $700 million on the acquisition of Progressive Finance without any input from shareholders appears to be a desperation move designed to do nothing but block our offer. Aaron's does not need Progressive Finance and the $426 million in new debt incurred to finance the acquisition—it needs new directors who will install a new management team. We believe that Wall Street's reaction to the acquisition (masked though it may be by another earnings miss) clearly shows this is not the solution that shareholders wanted.

"As part of the Progressive Finance acquisition, Aaron's announced yet another vague strategic plan that you would like us to believe will somehow miraculously cure all of the ills faced by Aaron's long-suffering shareholders and franchisees, who have now endured over two years of value destruction. Meanwhile, Aaron's management team continues to reap the rewards of lucrative compensation packages without any meaningful oversight by the Board of Directors."

Currently Aaron's (NYSE: AAN) second largest shareholder, Vintage Capital owns approximately 10% of the outstanding stock. Vintage Capital said it had been prepared to raise its offer from $30.50 per share after due diligence.

On Aaron's Furniture: 
Aaron's Furniture Makes a Case Against Vintage Capital Buyout
Aaron's $28 M Legal Set aside

Aaron's Founder Retires, Profits Triple
Aaron's Renames Furniture Factories

Vintage Capital's unsolicited $2.3 billion buyout bid was made prior to news that Aaron's net income plunged 38% in the fourth quarter.

Protesting the offer, Aaron's board said in an SEC filing that Kahn, a former franchisee of Aaron's, and Vintage Capital, which has a controlling percentage of smaller competitor Buddy's Home Furnishings, have made "unfunded and unspecific non-binding proposals to acquire Aaron's."

In addition to its rent-to-own businesses, Aaron's Inc. operates Woodhaven Furniture Industries, a captive division that manufactured more than $100 million, at cost, of furniture and bedding in the 14 facilities Aaron's operates in seven states. Most of the production of Woodhaven is for shipment to Aaron's 2,100 retail and franchise  stores.

Have something to say? Share your thoughts with us in the comments below.