Aaron's, Inc.

Ownership

Public (NYSE: AAN)

Company Description

Aaron’s, headquartered in Atlanta, Georgia, is the nation’s leader in the sales and lease ownership and specialty retailing of residential furniture, consumer electronics, home appliances and accessories with more than 1,815 Company-operated and franchised stores in 48 states and Canada.  Founded in 1955 by R. Charles Loudermilk, Sr. and publicly traded since 1982, Aaron’s is  a pioneer in the furniture rental industry.

Objective

Aaron’s had two classes of publicly-traded common stock outstanding since November 1992.  The rights of both classes of stock were identical, except that the holders of Class A Common Stock were entitled to one vote per share, and the holders of Common Stock were not entitled to vote.  Mr. Loudermilk, Sr., founder, former CEO and Chairman of Aaron’s, held 61.5% of the outstanding voting shares.  As the trading volume disparity and price differential between the two classes of stock became more pronounced, Mr. Loudermilk became more interested in a recombination of the two classes of common stock.  The Board of Directors of Aaron’s formed a Special Committee of independent directors to review combining the two classes of common stock.  The Special Committee believed the elimination of the dual-class stock structure would increase trading liquidity, align voting rights with economic ownership, eliminate investor confusion and increase acceptance by institutional investors.

Advisory Role

VRA Partners was engaged by the Special Committee to serve as its independent financial advisor and to render an opinion with respect to the potential reclassification or unification of Aaron’s common stock.  VRA Partners presented information to the Special Committee about other public companies with two classes of publicly-traded common stock and information about certain transactions in which two classes of publicly-traded common stock were combined into one, including the proposed exchange  ratios.

Result

In September 2010, the Special Committee recommended to the Board of Directors that the Company affect a reclassification of each outstanding share of Common Stock into one share of Class A Common Stock as “Common Stock”.  VRA Partners delivered its written opinion to the Special Committee that, from a financial point of view, the one-for-one exchange ratio was fair to the holders of Common Stock and Class A Common Stock.  In December 2010, a majority of the shareholders of Aaron’s at a special meeting approved the conversion of its non-voting Common Stock into voting Class A Common Stock on a one-for-one basis.  As a result, all shares of Common Stock were converted into shares of Class A Common Stock and are now traded under the NYSE symbol “AAN”.