Cintas Corporation To Acquire G&K Services
Distributor Cintas Corporation (UPIC: CINTP001) has entered into a definitive agreement to acquire G&K Services, a service-focused provider of branded uniform and facility services programs in the U.S. and Canada. Cincinnati, Ohio-based Cintas will acquire all outstanding shares of G&K Services for $97.50 per share in cash, for a total enterprise value of approximately $2.2 billion, including acquired net debt. The purchase price represents a premium of about 19 percent to the closing price per share of G&K Service’s common stock on August 15.
Cintas says the merger of the two companies will provide a continued opportunity for it to achieve its mission to exceed customers’ expectations in order to maximize the long-term value of the company for its shareholders and employees, whom the company calls partners. Cintas has had strong organic growth over many years, and the merger with G&K Services will provide access to additional processing capacity. Route density will also increase which will improve customer service and result in significant cost savings.
The transaction is expected to be accretive to Cintas’ earnings per share in its second full year after closing. Additionally, Cintas anticipates realizing annual synergies in the range of $130 million to $140 million. Synergies are projected to be realized in their entirety in the fourth full year after closing.
“Cintas’ management team and Board of Directors have a deep level of respect for G&K Services, its long and impressive heritage, and its employees,” says Scott D. Farmer, Cintas’ CEO. “Our companies share a dedication to customers, employees-partners and shareholders, which will build a great foundation for a successful combination.”
The boards of directors of both companies have approved the transaction, which is subject to approval by the holders of G&K Services common stock, the expiration or termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other customary closing conditions. The transaction is expected to close in the next four to six months.
Upon completion of the merger, G&K Services will be a wholly owned subsidiary of Cintas, and is expected to initially operate under its existing brand name. Working together, decisions will be made over time regarding the integration of the two companies, ultimately resulting in a fully harmonized team.