Unifirst Corporation UNF shares are trading higher on Tuesday. Cintas Corporation CTAS has made a solid move by submitting a proposal to acquire all outstanding shares of UniFirst for $275 per share in cash.
This offer, which represents a 46% premium to UniFirst’s ninety-day average closing price as of January 6, 2025, values UniFirst at approximately $5.3 billion.
The $275 per share offer is also a 54% premium to UniFirst’s closing price on February 7, 2022, when Cintas initially made a proposal of $255 per share. Cintas noted that UniFirst has repeatedly rejected Cintas’ attempts to engage in discussions.
Per the press release today, Cintas made multiple efforts to initiate collaborative talks, even expressing willingness to increase the offer price and explore alternative forms of consideration for the benefit of UniFirst shareholders. However, UniFirst’s board has declined to meet and engage with Cintas at every turn.
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Todd Schneider, President and CEO of Cintas, emphasized the strategic fit between the two companies, stating that the acquisition would drive growth through enhanced technology investments, processing capacity, and greater route density.
“While we would have preferred to have discussions with UniFirst in private, this is the second time in nearly three years that UniFirst has refused our constructive attempts to engage on an extremely compelling offer. Our decision to publicize our Proposal reflects our conviction in the merits of the combination, the value we place on UniFirst and its team and belief that UniFirst shareholders should know the value they stand to realize,” Schneider said.
Cintas said the proposed merger would also help the two companies tackle increasing competition from larger, better-capitalized firms in the garment and facility solutions sector.
Cintas said it is confident that the acquisition will create significant operational synergies and benefit both companies’ shareholders. It is also committed to a smooth regulatory review process, with no financing contingencies, as the offer will be financed through Cintas’ cash on hand, committed lines of credit, or other available funding sources.
While Cintas has publicly disclosed the details of its proposal, it continues to call on UniFirst’s board, management, and controlling shareholders to engage in meaningful discussions to reach a mutually acceptable agreement.
While releasing its second-quarter results in December 2024, Cintas said its fiscal year 2025 interest net is expected to be approximately $101.0 million compared to $95.0 million in the fiscal year 2024, predominately as a result of higher variable rate debt. This may change as a result of future share buybacks or acquisition activity.
Price Action: UNF shares are trading higher by 31.8% to $223.18 at last check Tuesday, while CTAS shares are trading higher by 3.44% to $191.48.
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