Conn’s, Inc. (NASDAQ: CONN) (“Conn’s” or the “Company”), a
specialty retailer of home goods, including furniture and
mattresses, appliances, and consumer electronics, today announced
that it has consummated a transaction that has resulted in W.S.
Badcock LLC (“Badcock”), a leading home furnishings company in the
southeastern U.S., becoming a wholly-owned subsidiary of the
Company. The all-stock transaction was unanimously approved by
Conn’s Board of Directors. Conn’s also announced that Norman L.
Miller has been named President and CEO of Conn’s, Inc.
Mr. Miller has served as a Conn’s Board Member since September 2015
and as interim President and CEO since October 2022. He previously
served as Conn’s President and CEO from September 2015 to August
2021 and Executive Chairman from August 2021 until April 2022.
Founded in 1904, Badcock operates nearly 380 stores in eight
southeastern states comprised of 65+ corporate locations and 310+
independent dealer owned stores. The stores are branded “Badcock
Home Furniture & more” and provide customers with furniture,
appliances, bedding, electronics, home office equipment,
accessories, and seasonal items. Badcock offers customers
affordable payment plans, including Badcock Easy Purchase, an
in-house payment solution. Mitchell Stiles, President and COO of
Badcock, will lead Badcock and report to Conn’s CEO, Norm
Miller.
“Today’s announcement represents one of the most significant
events in the Company’s over 120-year history,” said Bob Martin,
Conn’s lead independent director. “The combination immediately
positions Conn’s as a leading home goods retailer across the
southern U.S. It also supports our existing strategic growth
priorities by providing our unmatched payment options, leading
eCommerce capabilities, and premium shopping experience to more
customers. In addition, on behalf of Conn’s Board of Directors, I
am pleased to announce that Norm Miller has been named President
and CEO of the combined company. Norm is a proven leader, who
previously led Conn’s to multiple record setting years of
profitable growth. The Badcock transaction significantly enhances
Conn’s scale allowing us to leverage a powerful infrastructure and
deliver strong financial returns for many years to come.”
The transaction brings together two highly complementary
companies with significant reach across 15 states and powered by
best-in-class payment offerings, compelling eCommerce capabilities,
and a premium shopping experience. The combined company is expected
to have annual revenue of approximately $1.85 billion across 240+
corporate owned stores and 310+ dealer locations, with eCommerce
sales of approximately $125 million. Conn’s will become a top-20
furniture and mattress retailer in the U.S. according to Furniture
Today’s latest top 100 list. In addition, Conn’s will now provide
last-mile delivery to over 92% of the population that resides in
the 15 states in which it operates. The combined company will also
have a credit portfolio of $1.1 billion, projected to generate
approximately $364 million in annual finance charges and other
revenue. Management expects to realize over $50 million in run-rate
cost savings from the Badcock transaction in 18 months, with
further upside expected in the future, supported by improved
procurement, logistics, general and administrative, and corporate
expenses as well as credit optimization opportunities.
Norm Miller, President and CEO of Conn’s, said, “Today's
announcement transforms Conn’s into a leading home goods retailer
that is expected to have $1.85 billion in revenue across strong
urban and rural markets in the southern U.S. We believe the
combination of these two complementary businesses will produce
significant value as we pursue credit driven revenue growth
strategies, enhance Badcock’s in-house credit offering, and
leverage a more diverse and larger organization. For over 120
years, both Conn’s and Badcock have provided customers with home
goods they want, at prices they love, with affordable payment
solutions. We look forward to building on this legacy by leveraging
Conn’s capabilities, expertise, and innovation to support greater
opportunities for our combined communities, customers, dealers, and
employees. As a result, we are confident this combination will
produce significant long-term value for all of our
shareholders.”
Mitchell Stiles, President and COO of Badcock, said, “Conn’s and
Badcock share complementary business models, histories, and
customers, and the expected revenue and cost synergies are
extremely powerful. The enhanced scale of the combined company
creates one of the largest home goods retailers in the southern
U.S. We believe both our dealer and corporate owned stores will
benefit from Conn’s customer centric culture, best-in-class payment
solutions, expanded product assortment, and leading eCommerce
platform. On behalf of everyone at Badcock, I look forward to
working with Norm and his team as we integrate the two companies
and drive long-term, profitable growth.”
Transaction Details
The transaction was consummated as an all-stock deal with Conn’s
issuing 1,000,000 of its non-voting senior preferred shares
convertible into a to-be issued class of non-voting common, subject
to shareholder vote, representing 49.99% of Conn’s outstanding
common stock after giving effect to the stock issuance and assuming
the conversion of such preferred shares into non-voting common
stock. The transaction was unanimously approved by the
Board of Directors of both Conn’s and Franchise Group and the
creation and issuance of the non-voting common shares is subject to
approval of Conn’s shareholders in accordance with NASDAQ listing
rules and Conn’s charter. Shareholders of Conn’s, holding in excess
of 40% of the outstanding common stock, have signed voting
agreements to approve the stock issuance and related matters. Upon
shareholder approval of the creation and issuance of the class of
non-voting common shares, Conn’s expects to have approximately 49
million shares outstanding comprised of both voting and non-voting
common shares.
Advisors
Stephens Inc. and Deutsche Bank Securities Inc. served as
financial advisors and Sidley Austin LLP served as legal counsel to
Conn’s. JP Morgan Securities LLC served as financial advisor and
Willkie Farr & Gallagher LLP served as legal counsel to
Franchise Group and W.S. Badcock LLC.
Conference Call Details
Conn’s will host a conference call to discuss the transaction
and review its fiscal 2024 third quarter financial results at 11:00
a.m. (ET) tomorrow, December 19, 2023. Participants can join the
call by dialing 877-451-6152 or 201-389-0879. The conference call
will also be broadcast simultaneously via webcast on a listen-only
basis. A link to the release, webcast and presentation slides are
available at ir.conns.com.
Replay of the telephonic call can be accessed through December
26, 2023, by dialing 844-512-2921 or 412-317-6671 and using the
Conference ID: 13740585.
About Conn’s, Inc.
Conn's HomePlus (NASDAQ: CONN) is a specialty retailer of home
goods, including furniture and mattresses, appliances and consumer
electronics. With 175+ stores across 15 states and online
at Conns.com, our approximately 4,000 employees strive to help
all customers create a home they love through access to
high-quality products, next-day delivery and personalized payment
options, including our flexible, in-house credit program.
Additional information can be found by visiting our investor
relations website at https://ir.conns.com and social channels
(@connshomeplus on Twitter, Instagram, Facebook and LinkedIn).
About Badcock Home Furniture & more
W.S. Badcock LLC is a Southeastern home furnishings company
headquartered in Mulberry, FL. Founded in 1904, its branded Badcock
Home Furniture & more retail chain has grown to nearly 380
corporate and associate dealer stores across eight states. Badcock
offers furniture, appliances, bedding, electronics, home office
furnishing, accessories and seasonal items while providing payment
plans just right for its customers. For more information, visit
www.badcock.com.
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in
respect of obtaining approval of the stockholders of Conn’s, Inc.
(the “Company”) of the proposed transactions (the “Stockholder
Approval”). In connection with obtaining the Stockholder Approval,
the Company will file with the Securities and Exchange Commission
(the “SEC”) and furnish to the Company’s stockholders a proxy
statement and other relevant documents. This communication does not
constitute a solicitation of any vote or approval. BEFORE MAKING
ANY VOTING DECISION, THE COMPANY’S STOCKHOLDERS ARE URGED TO READ
THE PROXY STATEMENT IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE AND
ANY OTHER DOCUMENTS TO BE FILED THE SEC IN CONNECTION WITH THE
STOCKHOLDER APPROVAL OR INCORPORATED BY REFERENCE IN THE PROXY
STATEMENT BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
TRANSACTION. Stockholders will be able to obtain free
copies of the proxy statement and other documents containing
important information about the Company once such documents are
filed with the SEC, through the website maintained by the SEC at
http://www.sec.gov.
Participants in the Solicitation
The Company and its executive officers, directors, other members
of management and employees may be deemed, under SEC rules, to be
participants in the solicitation of proxies from the Company’s
shareholders with respect to the proposed transaction. Information
regarding the executive officers and directors of the Company is
set forth in its definitive proxy statement for its 2023 annual
meeting filed with the SEC on April 13, 2023, as amended. More
detailed information regarding the identity of potential
participants, and their direct or indirect interests, by securities
holdings or otherwise, will be set forth in the proxy statement and
other materials to be filed with the SEC in connection with the
proposed transaction.
This press release contains forward-looking statements within
the meaning of the federal securities laws, including, but not
limited to, the Private Securities Litigation Reform Act of 1995,
that involve risks and uncertainties. Such forward-looking
statements include statements regarding benefits of the proposed
transaction, integration plans and expected synergies, anticipated
future financial and operating performance and results, including
estimates for growth, business strategy, plans, goals, and
objectives. Statements containing the words “anticipate,”
“believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,”
“project,” “should,” “predict,” “will,” “potential,” or the
negative of such terms or other similar expressions are generally
forward-looking in nature and not historical facts. Such
forward-looking statements are based on our current expectations.
We can give no assurance that such statements will prove to be
correct, and actual results may differ materially. A wide variety
of potential risks, uncertainties, and other factors could
materially affect our ability to achieve the results either
expressed or implied by our forward-looking statements, including,
but not limited to: our ability to integrate the W.S. Badcock
business, the possibility that our shareholders may not approve the
issuance of non-voting common stock required for conversion of the
preferred stock issued in connection with the transaction, the risk
that any announcement relating to the transaction could have
adverse effects on the market price of Conn’s common stock, the
risk that the transaction and its announcement could have an
adverse effect on our ability to retain customers and retain and
hire key personnel and maintain relationships with suppliers and
customers, our ability to achieve synergies, our inability to
operate the combined company as effectively and efficiently as
expected, the condition of the W.S. Badcock business being
materially worse than the condition we expect it to be in and/or
including unanticipated liabilities, our inability to achieve the
intended benefits of the transaction for any other reason, general
economic conditions impacting our customers or potential customers;
our ability to execute periodic securitizations of future
originated customer loans on favorable terms; our ability to
continue existing customer financing programs or to offer new
customer financing programs; changes in the delinquency status of
our credit portfolio; unfavorable developments in ongoing
litigation; increased regulatory oversight; higher than anticipated
net charge-offs in the credit portfolio; the success of our planned
opening of new stores; expansion of our eCommerce business;
technological and market developments and sales trends for our
major product offerings; our ability to manage effectively the
selection of our major product offerings; our ability to protect
against cyber-attacks or data security breaches and to protect the
integrity and security of individually identifiable data of our
customers and employees; our ability to fund our operations,
capital expenditures, debt repayment and expansion from cash flows
from operations, borrowings from our Revolving Credit Facility or
our Delayed Draw Term Loan; and proceeds from accessing debt or
equity markets; the effects of epidemics or pandemics, including
the COVID-19 pandemic; and other risks detailed in Part I, Item 1A,
Risk Factors, in our Annual Report on Form 10-K for the fiscal year
ended January 31, 2023 and other reports filed with
the Securities and Exchange Commission. If one or more of
these or other risks or uncertainties materialize (or the
consequences of such a development changes), or should our
underlying assumptions prove incorrect, actual outcomes may vary
materially from those reflected in our forward-looking statements.
You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
press release. We disclaim any intention or obligation to update
publicly or revise such statements, whether as a result of new
information, future events or otherwise, or to provide periodic
updates or guidance. All forward-looking statements attributable to
us, or to persons acting on our behalf, are expressly qualified in
their entirety by these cautionary statements.
CONN-GS.M. Berger & CompanyAndrew Berger (216)
464-6400
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