Aaron’s, Inc. to Separate into Two Public Companies

  •    Author: Mike Jasfer

Aaron’s, Inc. , an omnichannel provider of lease-purchase solutions, recently announced that it intends to separate into two independent, publicly-traded companies: Progressive Leasing (“Progressive”) and the Aaron’s Business (“Aaron’s”). Both companies are expected to benefit from improved strategic focus, market-leading positions, strong free cash flow generation and well-capitalized balance sheets, enabling each to unlock substantial value creation opportunities.  The separation is planned as a tax-free spin-off of Aaron’s to the Company’s shareholders and is expected to be completed by the end of the year. 
“I’m proud that we have built two strong businesses, both of which are well-positioned for long-term success as independent companies,” said John Robinson, President and Chief Executive Officer of Aaron’s, Inc. “The Board and management team believe that separating Progressive and Aaron’s will enhance long-term shareholder value and is the next logical step in the evolution of our organization.”
The proposed transaction will create two highly focused companies:
Progressive: With approximately $2.2 billion of revenue in 2019, Progressive will be comprised of the Company’s current Progressive business segment as well as Vive Financial.  As a standalone company, Progressive will be well-positioned for continued strong growth by:
Investing in innovative technologies
Growing existing retail partnerships
Attracting new retail partner opportunities in a large addressable market
Maintaining an attractive financial profile driven by a capital-efficient business model in a high-growth market
Aaron’s: With approximately $1.8 billion of revenue in 2019, Aaron’s will be comprised of approximately 1,400 company-operated and franchised stores in 47 U.S. states and Canada, the e-commerce platform Aarons.com, and Woodhaven Furniture Industries (“Woodhaven”).  As an established leader in the lease-to-own industry, Aaron’s will be well-positioned to:
Execute its strategic priorities, including its real estate repositioning and digitally-enabled omnichannel strategies
Provide compelling customer value proposition driven by competitive pricing, high approval rates and local servicing advantages
Maintain an attractive financial profile including future earnings growth and positive free cash flow

Leadership and Governance
Steve Michaels, the Company’s Chief Financial Officer and President of Strategic Operations, has been appointed Chief Executive Officer of the Company’s Progressive Leasing business segment, effective July 31, 2020, succeeding Ryan Woodley. Mr. Michaels has been instrumental in building and positioning the Company for long-term success. Importantly, he led the 2014 acquisition of Progressive and has worked closely with that team for the last several years. Mr. Woodley will serve as an advisor to Progressive to ensure a seamless transition.
Blake Wakefield, President and Chief Revenue Officer of the Progressive Leasing business segment, who has been instrumental in the growth of Progressive Leasing and the development of its retail partner portfolio, will continue to serve in that capacity. Both Messrs. Michaels and Wakefield will continue to serve in their respective capacities following completion of the separation.
Also, effective July 31, 2020, Douglas Lindsay, President of the Company’s Aaron’s Business segment, will become Chief Executive Officer of the Aaron’s Business, and Steve Olsen, Chief Operating Officer of the Aaron’s Business, will become President of the Aaron’s Business. Messrs. Lindsay and Olsen have been the primary architects of the Aaron’s Business transformation, including its merchandising, real estate and technology strategies. Both Messrs. Lindsay and Olsen will continue to serve in their respective capacities following completion of the separation.
John Robinson, President and Chief Executive Officer of Aaron’s, Inc., will continue in his current role and will oversee the separation. He is expected to depart from his day-to-day role at the Company upon the earlier of completing the separation or December 31, 2020 and is expected to serve as Chairman of Aaron’s. Ray Robinson, who currently serves as the Company’s Chairman, is expected to serve as Chairman of Progressive following the separation. 
Kelly Wall, Senior Vice President of Finance and Treasurer of Aaron’s, Inc., will serve as Interim Chief Financial Officer of the Company until the separation has been completed. 
“I am pleased to have Steve and Douglas lead Progressive and Aaron’s to ensure the continued innovation, growth and value creation of these two great businesses,” said John Robinson. “Their experience and expertise have been critical to me over the last several years. I look forward to working with them as we complete the separation and continuing to work with Douglas in my role as Chairman of Aaron’s after the separation.”
Mr. Robinson continued, “On behalf of the Board and management team, I would like to thank Ryan Woodley for his outstanding leadership of Progressive over the past five years and his willingness to continue to serve in an advisory capacity during this transition. During his tenure as CEO, Progressive has quadrupled in size and generated remarkable growth for our Company. Without his contributions, this value-creating opportunity would not have been possible. We wish Ryan and his family all the best and appreciate his continuing support of Progressive.”
Additional management team and board member appointments for both companies will be announced prior to the separation.
Until the planned separation has been completed, the Company expects to continue to pay its regular quarterly cash dividend. Each business will set its own dividend policy following the separation.
Transaction Details
The transaction is expected to be completed by the end of 2020, subject to customary closing conditions, including final approval from the Company’s Board of Directors, receipt of a tax opinion of legal counsel with respect to the tax-free nature of the separation, and effectiveness of a Form 10 registration statement to be filed with the U.S. Securities and Exchange Commission.  The Company may, at any time and for any reason until the proposed separation has been completed, determine not to consummate the separation or to modify or change its terms.
 
About Aaron’s, Inc.: Headquartered in Atlanta, Aaron’s, Inc. (NYSE: AAN), is a leading omnichannel provider of lease-purchase solutions. Progressive Leasing provides lease-purchase solutions through more than 20,000 retail partner locations in 46 states and the District of Columbia, including e-commerce merchants. The Aaron’s Business engages in the sales and lease ownership and specialty retailing of furniture, home appliances, consumer electronics and accessories through its approximately 1,400 Company-operated and franchised stores in 47 states and Canada, as well as its e-commerce platform, Aarons.com. Vive Financial, provides a variety of near-prime credit products that are originated through federally-insured banks. For more information, visit Aarons.com, ProgLeasing.com, and ViveCard.com.
 

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