Rent-to-own giant Aaron’s buys Springdale finance firm for $100 million

Aaron's Inc. announced a deal on Tuesday (Sept. 22) to acquire all the outstanding stock of little known “nearprime” and consumer finance lender Dent-A-Med Inc. of Springdale for approximately $55 million in cash and the assumption of $44 million in debt, the Atlanta-based rent-to-own chain announced in a news release.

Aaron’s officials said Dent-A-Med which does business under the HELPcard name, will be operated as a wholly-owned subsidiary of Progressive Finance Holdings LLC, a lending arm of the publicly traded consumer electronics and home appliances leasing giant’s that operates in 46 states.

According to Aaron’s officials, the Springdale-based consumer finance firm offers “second look” credit programs for near-prime customers. The deal, which is valued at nearly $100 million in cash and debt, is expected to close within 45 days and not be accretive to Aaron's earnings in 2015, the company said.

In association with the HELPcard deal, Aaron’s also announced the launch of Approve.Me, a credit program to provide a single application for all customers seeking both credit approval and lease options for Aaron’s rent-to-own consumer products, furniture and appliances.

The HELPcard subsidiary is expected to enable Progressive to drive incremental revenue and earnings growth, by offering the company’s retail partners one source for financing and leasing transactions for below prime consumers, Aaron officials said. The new Arkansas-based subsidiary will also benefit from Progressive's proprietary technology, infrastructure and financial capacity.

"The HELPcard and Approve.Me have significant strategic benefits for our business," said Aaron’s CEO John Robinson. "Our retail partners have been asking us for an integrated solution to serve customers who are between Progressive's lease offering and major banks' prime credit products. We believe these offerings will fill that gap by creating a 'one-stop shop' at the point of sale for our retail partners."

In a conference call, Robinson said the acquisition of the Springdale company was made to enhance the profitability of its Progressive subsidiary, whose customer base is mostly subprime lenders. He said most of The HELPcard customers have credit scores at 650 or higher, which will enhance the company’s current portfolio of most non-banked and subprime customers.

According to the Aaron’s news release, HELPcard offers a variety of open-end financing programs originated through a federally insured bank. The programs have simple terms that are competitive with prime credit programs. The Springdale company has $92 million in gross receivables as of Aug. 31, 2015, and serves more than 700 merchant partners in more than 1,400 locations.

Robinson said during the conference call the Arkansas consumer credit company is profitable and has annual revenues exceeding $40 million.

“We intend to take that $40 million and grow it,” he said.

Aaron’s officials did not immediately return calls to answer questions concerning the Arkansas consumer credit firm, including the number of employees working in its Springdale offices.

In trading today, Aaron’s share fell 72 cents or 1.9% at $37.40. Shares of publicly traded Aaron’s have risen nearly 24% in fiscal 2015. In the second quarter, Aaron’s reported earnings of $40.5 million or 56 cents per share, compared to $8.5 million or 12 cents a share in the same period of 2014. Quarterly revenues rose 16.1% to $769 million.