Aaron Combines Common Stock - Analyst Blog

Aaron's Inc. (AAN) is a leader in the sale and lease ownership and specialty retailing of residential furniture, consumer electronics, home appliances and accessories.  Recently, the company's CEO and president Robert Loudermilk bestowed his vote in support to convert all shares into the same class.

Earlier, the share class was divided into sections of shareholders that either held Class A Common Stock with voting rights or non-voting Common Stock.  The conversion will result in all Common Stock shares being changed to Class A Common Stock on a one-for-one basis. The change was approved by the majority of shareholders of Class A Common Stock and non-voting Common Stock, marking their vote in favor of the conversion. All Class A common stock will then be referred to as Common Stock and will trade under the same symbol ‘AAN'. 

The conversion will come into effect immediately after the filing of the Amended and Restated Articles of Incorporation with the Secretary of State of Georgia after the close of trading on December 10, 2010. 

Mr. Robert Loudermilk, prior to the proposed conversion, held 61.0% of Class A Common Shares with voting rights. Following the conversion, his holding will dilute to 9.0% of the company's outstanding stock.  

The transaction does not take away Mr. Robert Loudermilk's control in the company but only changes his voting right from 61% to 9.0%. As of September 30, 2010, the company had 81.7 diluted shares outstanding.

The company operates in a highly fragmented specialty retail sector and faces intense competition from other well-established players, such as Rent-A-Center Inc. (RCII).

Aaron's shares maintain a Zacks #2 Rank, which translates into a short-term ‘Buy' rating. Our long-term recommendation on the stock remains ‘Neutral'.

 
AARONS INC (AAN): Free Stock Analysis Report
 
RENT-A-CENTER (RCII): Free Stock Analysis Report
 
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