(Reuters) - Rent-A-Center Inc (RCII.O) said on Tuesday it terminated a deal to be acquired by Vintage Capital Management, as the buyout firm did not extend a deadline to close the transaction that was waiting for regulatory approval six months after being announced.
Rent-A-Center agreed to be taken private by Vintage Capital in June in a $1.37 billion deal, including debt, bowing to pressure from activist investors who wanted the rent-to-own retailer to sell itself.
The company’s shares fell as much as 17 percent in morning trading on Tuesday after the company scrapped the deal, but recouped some of its losses after Vintage said the termination was “invalid”.
“Rent-A-Center’s purported termination of our merger agreement is invalid... (Vintage) intends to pursue all available remedies against Rent-A-Center,” the buyout firm said in a statement.
Under the terms of the deal, Vintage Capital will have to pay a reverse breakup fee of $126.5 million within three business days, Rent-A-Center said in a statement.
The move to end the deal comes two months after the Federal Trade Commission said it needed more information to signoff on the deal and extended its antitrust waiting period.
At the time both parties said they would cooperate with the regulator and close the deal by the end of March, 2019.
Rent-A-Center, however, said it decided to end the deal after Vintage did not notify it by Monday’s deadline on pursuing the deal further and also because its current financial and operational performance was on a better footing than in June.
The company’s profit and revenue have surpassed analysts’ estimates for the July-September period, mainly due to cost cuts.
Reporting by Nivedita Balu in Bengaluru; Editing by Maju Samuel