CINCINNATI and MINNETONKA, Minn. — Cintas Corp. and G&K Services Inc. have entered into a definitive agreement under which Cintas will acquire all outstanding shares of G&K Services, both companies report today.
Cintas says it will purchase the outstanding shares 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% to the closing price per share of G&K Service’s common stock on Monday, Aug. 15, according to the company.
Upon completion of the deal, 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, Cintas says.
Scott D. Farmer, Cintas’ CEO, says, “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. Our companies share a dedication to customers, employees-partners and shareholders, which will build a great foundation for a successful combination.”
G&K Services, with annual revenue of approximately $1 billion, says it is a service-focused market leader of branded uniform and facility services programs in the United States and Canada.
The combined companies say they will provide innovative products and caring service to more than 1 million business customers.
“This is a compelling transaction that delivers substantial and immediate cash value to our shareholders and expands options for our customers going forward,” says Douglas A. Milroy, chairman and CEO of G&K Services. “We believe the combination has strong strategic logic and creates the right partnership to meet the evolving needs of our customers. In addition, a larger, more diversified company offers employee opportunities as well.”
Cintas says it has had strong growth over many years, and the acquisition of 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 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.
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