Both stocks are on a tear this year. (“G&K” or the “Company”) (NASDAQ GS: GK) regarding possible breaches of fiduciary duties and other violations of law related to the Company’s entry into an agreement to be acquired by Cintas Corporation (“Cintas”) (NASDAQ GS: CTAS), in a transaction valued at approximately $2.2 billion.
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The deal is expected to generate annual savings of $130 million to $140 million, realized in the fourth year after closing, Cintas said. G&K shares were up 18 percent to $97. The total deal value also includes the assumption of G&K’s debt, the companies said in statements Tuesday. Minnesota-based G&K serves more than 170,000 customers in the healthcare, transportation and manufacturing industries in the USA and Canada, generating more than $1 billion in annual revenue. G&K shareholders will be asked to vote on it. Under terms of the deal, Cintas will pay $97.50 for each G&K share outstanding, representing a 19% premium to Monday’s closing price.
G&K was formed from the merger in 1934 of two dry-cleaning services in Minneapolis-St.
Cintas has been growing as its clients put more people back to work following the recession. Revenue rose 9.3% to $258.5 million.
In July, Cintas reported $693.5 million profit on $4.9 billion in sales for the fiscal year ended May 31. G&K Services, with annual revenue of about $1 billion, is a provider of branded uniform and facility services programs in the US and Canada.
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Cintas has always been known as an industry consolidator, buying more 200 companies in its history. WCPO Insiders will learn how the deal improves “route density” for Cintas and why that could propel future growth.
