Easyhome buys Insta-Rent
MISSISSAUGA, Ontario - Easyhome has signed an agreement to acquire competitor Insta-Rent Inc. for 50 cents per share in cash, giving the deal an approximate total value of $10.2 million.
Easyhome, Canada's largest rent-to-own big ticket home goods merchant, will fund the buy-out through bank debt. The deal is expected to close by the end of September.
Insta-Rent has 44 kiosks located in the same number of Brick stores across the country, as well as six free-standing stores. In a statement, Easyhome said it will rationalize the existing Brick-centred locations "with a view to maximizing synergies from this transaction, including running some as a sales kiosk or full-service kiosk."
Easyhome will also close four of the exiting Insta-Rent stores as well as many of the 70 storage units in which the latter currently stores idle inventory while disposing of approximately 50 excess delivery vehicles. "At the same time, Easyhome will redirect many of the 8,300 Insta-Rent customers to Easyhome stores as approximately 70 per cent of the Insta-Rent locations are within six kilometres of an Easyhome store," the company said in a statement.
It also noted that Insta-Rent currently has annualized revenues of approximately $18 million. "We anticipate with the merging of the operations into Easyhome's that the transaction could deliver an incremental 30 to 35 cents per share to Easyhome's shareholders in 2009," the company said, adding there will be a modest impact on earnings this year.
"Easyhome has an excellent track record of value creation and a strong growth strategy," Easyhome chairman Donald Johnson said. "Our management team was able to quickly identify and correct the cause of the earnings decline. We are confident that management has dealt effectively with the issues. The acquisition of Insta-Rent will further strengthen the company and enhance value for shareholders."
Insta-Rent's board of directors has unanimously recommended acceptance of the offer and a majority of shareholders - including Gordon Reykdal, the largest single shareholder as well as company officers and directors - have agreed to tender their holdings. They account for 60 per cent of the outstanding shares in Insta-Rent.
The offer will be sent to Insta-Rent shareholders on 20 August 2008 and will be open for 35 days. It is also conditional on a minimum of two-thirds of the outstanding shares being tendered under the offer.