10-11-02
RTO Online

Related articles most recent first Source: Rainbow Acquisition May Reach 13 Times Revenue Rent A Center to Acquire Rainbow Rentals For $94.9 Million Plus Rainbow Rentals Struggles For Identity In Crowded Field Rainbow Rentals Reports Net Income Down 25%; Same Store Sales Up Disappointing 1.1% Rainbow Rentals Conference Call Summary Rainbow Rentals Reports Q2 Revenue Up Slightly; Comp Store Sales Flat Rainbow Rentals Appoints Director of Marketing Rainbow Rentals Ad Agency Says Clean Lists and Smart Outreach are Keys To Overcoming Smudge Against Telemarketing Rainbow Founder Larry Hendricks Resigns; Replaced By Robert Harris as COO Rainbow Rentals Ad Agency of Record, Innis Maggiore Group, Ohio's Fastest Growing Agency Rainbow Rentals Reports Same Store Sales Decline in Q1; Announces Addition of Robert Harris Rainbow Rentals Selects SBC Advertising as Agency of Record Rainbow Rentals Schedules Q1 Conference Call Rainbow Rentals Annual Shareholders Meeting Rainbow Rentals 10K Highlights Q4 Conference Call Summary Rainbow Announces Improved Results For 2002 Rainbow schedules Q4, 2002 call Aaron Rents Ups Stake in Rainbow Rentals to 8% Calendar Year Stock Performance Review, 2002 Rainbow Rentals Q3 Results...Revenue up 7.6% Aaron Rents Buys 5% of Rainbow Rentals Rainbow Rentals Joins MARTA

In documents filed with the SEC on Thursday, Aaron Rents reported the purchase of 300,000 shares of competitor Rainbow Rentals common stock. This purchase represents more than 5% of Rainbow's outstanding shares.

The purchase took place in 2 separate transactions of 150,000 shares each on Aug 19th, and Sep 30. Aarons paid $4.75 per share for a total investment of $1.425 million.

RTO Online contacted Gil Danielson, Aaron Rents Chief Financial Officer, for comment. Mr. Danielson stated that this transaction was viewed strictly as an investment opportunity. "With the depressed stock price, it's a good value", Mr. Danielson said.

When asked directly if Aaron Rents intends to buyout Rainbow Rentals, Mr. Danielson stated,

Gil Danielson
CFO, Exec VP, Director
"If Rainbow ever wanted to do anything, we would certainly want to be considered."

Officials from Rainbow would not comment beyond what Aaron Rents released in the form 13D filed with the SEC.

Aaron Rents has purchased the stock of other companies as an investment in the past, but seldom this heavily, and never in it's own sector.

While 300,000 shares is a little over 5% of total outstanding shares, it is more than 11% of the float, last reported at 2.6 million shares. Rainbow stock has fallen over 24% in the last 12 months, but has outperformed a struggling S&P by 2.6%.

While SEC documents state, and Aaron Rents officials confirm, that no merger or buyout is in the works, one has to wonder about a marriage between these two companies. The combined force of the 3rd and 4th largest rent to own companies in the US would be something to behold.

Rainbow and Aaron Rents operating philosophies are actually very similar. Widely separated, large footprint stores that consistently deliver double the US average for annual revenue per location.

update: Rainbow stock (RBOW) closed up 14.5% to $6.24 per share. Aaron Rents (RNT) was up only slightly, 0.38% to close at $21.10.

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Float
The total number of outstanding shares owned by the public that are available for trading. The float is calculated by subtracting restricted shares from outstanding shares. RBOW is very thinly held, the companies float is only 44%
 

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