AAN

Will the feds halt AAN’s go-private deal?
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The Aaron’s Company looks like it’s hiding the real buyer

September 3, 2024
J Capital Research ("J Cap")  is a stock-research company. ​J Cap  has analyzed the U.S.-listed company The Aaron's Company (“AAN”) and is hereby publishing the outcome and the conclusions of our analysis, based on publicly available information. We may benefit from a decline in the price of AAN shares, and, for this reason, there might be a conflict of interest.
  • We believe regulators could slow or stop the go-private deal The Aaron’s Company (AAN) has made. Currently, AAN shares trade at almost no discount to the announced bid price and have not factored in this regulatory risk.
  • We think IQVentures, the vehicle AAN says will pay $504 mln to AAN shareholders, may be a front for a buyer who’s afraid the deal would not otherwise pass regulatory scrutiny. IQVentures has never done a deal bigger than $10 mln, according to public sources. Government review would certainly be required for the merger of two high-interest lenders.
  • We submitted Whistleblower reports on AAN to the FTC and the CFPB. We also submitted FOIA requests to both agencies. Both agencies tend to be highly suspicious of rent-to-own and payday lending practices.
  • The other lender apparently behind the deal, CCF Holdings LLC, recently appears to have acquired several similar companies, including the chairman’s former company, TMX Finance Ltd, as well as Speedy Cash, Rapid Cash, and Avio Credit. With AAN stores, CCF would own around 3,000 locations, giving them a much larger share of a fragmented market. A combination could trigger anti-monopoly and predatory-lending reviews.
  • In 2020, Aaron’s paid one of the biggest FTC settlements in history over misrepresenting the price of rent-to-own payment plans. Like AAN, CCF and its new subsidiary, TMX, are no strangers to regulatory sanction.
  • At least four law firms are soliciting class-action suits, apparently because of the speed and lack of visible process around this deal.
  • Upside for insiders in the go-private deal looks to us more attractive than benefit for public shareholders. Five AAN executives or directors bought stock in Q4 2023 after discussions on the offer began but before it was disclosed to shareholders. They bought at an average price of $7.27, 39% below the offer price.
  • CCF, the possible merging firm, may have its eyes on AAN’s normally abundant cash flow and credit facilities. Could these strengths instead benefit AAN shareholders?
  • A special shareholder meeting will be held on September 25 to approve the merger. The DOJ rarely waits until a merger/acquisition deal has closed before filing an anti-trust lawsuit, although that was the case for Parker Hannifin’s acquisition of CLARCOR.
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