Shares of Rent-A-Center ( RCII 6.53% ) jumped more than 10% by 10:45 p.m. EST on Monday. Driving up the stock of the lease-to-own provider was the expansion of its fintech platform via the acquisition of Acima.
Rent-A-Center is paying $1.65 billion in cash and stock to acquire Acima, a leading virtual lease-to-own solution provider. Acima operates in more than 15,000 active retail partner locations and e-commerce platforms. The company is on track to generate $1.25 billion of revenue and $225 million of adjusted EBITDA in 2020, which is a significant increase from 2016 when it only produced $97 million in revenue. The deal will boost Rent-A-Center's pro forma numbers to $4.1 billion in revenue and $540 million in adjusted EBITDA.
The combination with Acima will expand Rent-A-Center's position as a leader in both the virtual and traditional lease-to-own segments. It should improve the company's long-term outlook for revenue, profitability, and cash flow growth.
Rent-A-Center is acquiring a fast-growing fintech platform. The company anticipates that the deal will allow it to grow faster, increase its virtual partner base, and help more financially constrained customers with the flexibility of lease-to-own financing options. That potential ability to accelerate its growth by expanding its fintech platform makes Rent-A-Center stock worth a closer look.