Dive Brief:

• Rent-A-Center on Monday said it has inked a definitive agreement to acquire "substantially all of the assets" of virtual rent-to-own services company Merchants Preferred for $28 million in cash and a minimum of 701,918 shares of Rent-A-Center common stock.

• The acquisition, expected to close in the third quarter, has been unanimously approved by Rent-A-Center's board of directors and is subject to customary closing conditions, according to a company press release.

• The deal is valued at $47.5 million or so, based on Rent-A-Center's closing $27.83 per-share stock price on July 12, the company said. The impact to 2019 earnings from the acquisition is not expected to be material.

Dive Insight:

By grabbing Merchants Preferred's back-office and technology infrastructure and management team, Rent-A-Center hopes to solidify its "virtual rent-to-own" services, a sign of how important the financial services side of its business is. In their release Monday, the companies said that it's a $20 billion market.

Rent-A-Center owns and operates some 2,200 stores in the U.S., Mexico and Puerto Rico, and about 1,100 "Acceptance Now" kiosks, which, like Merchants Preferred, provide rent-to-own financing for people with slim or poor credit profiles, in the U.S. and Puerto Rico.

"The addition of the Merchants Preferred technology platform and its approximately 2,500 locations enables us to accelerate our expansion plans with respect to the Company's virtual rent-to-own capabilities by at least 18 months," Mitch Fadel, CEO of Rent-A-Center, said in a statement. "This acquisition positions us for growth and differentiates us from competitors, allowing us to offer both virtual and staffed solutions to our retail partners."

In his own statement on the deal, Merchants Preferred CEO Joe Corona called his company "very complementary to the Acceptance Now business model." But the deal does more than simply add Merchants Preferred's 2,500 or so locations to the Acceptance Now platform. It also helps Rent-A-Center expand its ability to provide financing for furniture and home goods purchases at "large, national retail and online partners" and to expand beyond those categories, the company said.

Rent-A-Center could use the boost as it shifts its strategy away from physical furniture rental locations. The company late last year terminated a merger agreement with private equity firm Vintage Capital Management (owner of one of its major rivals, Buddy's Home Furnishings) amid antitrust concerns. Last year the company put much of its energy toward slashing costs, including shuttering under-performing locations.