What happened

Shares of Rent-A-Center Inc. (NASDAQ:RCII) surged on Tuesday after Vintage Capital Management increased its offer to acquire the company. Rent-A-Center disclosed on Monday that it had received an offer from one of the companies involved in its strategic review process soon after that process was ended. Rent-A-Center stock was up about 15% at 12:35 p.m. EDT.

So what

Vintage Capital is now offering to acquire Rent-A-Center for $14 per share. This offer comes one day after Rent-A-Center ended its strategic review due to a lack of satisfactory offers. Vintage Capital had previously offered to buy the company for $15 per share in July 2017, but it lowered its bid to $13 per share last November.

The exterior of a Rent-A-Center store.

Image source: Rent-A-Center.

In a press release on Monday, before Vintage Capital's latest bid, Rent-A-Center said that "the Board would carefully consider any credible proposal with the assistance of its outside financial and legal advisors to determine whether a proposal would ultimately maximize stockholder value."

Rent-A-Center's revenue has stagnated over the past decade, with 2017 sales slightly below 2008 sales. Margins have eroded as well, with the double-digit operating margins of the past giving way to a small operating loss last year.

Now what

Shares of Rent-A-Center have tumbled 69% since peaking in late 2013, a result of deteriorating fundamentals. The company's strategic plan involves cost-cutting, working capital optimization, franchising locations, and debt reductions.

The $14 per share offer from Vintage Capital is much lower than where the stock traded a few years ago, but it may be the best option for the company.

Timothy Green has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.