Cintas to buy smaller rival G&K Services for $2.2 bn

Cintas Corp, a provider of uniforms and related services to a variety of industries, yesterday struck a deal to buy its smaller rival G&K Services Inc, for about $2.2 billion, including debt.

Under the terms of the deal, Cintas is offering to pay $97.50 per share in cash or $1.93 billion excluding debt. The offer is at a premium of about 19 per cent to G&K's Monday closing price.

Cintas expects to fund the transaction through a combination of existing cash, assumption of existing G&K's debt, and new debt.

It has obtained committed financing in the form of a bridge credit facility from KeyBank National Association and JPMorgan Chase Bank.

Post closing, G&K will be a wholly-owned subsidiary of Cintas, and is expected to initially operate under its existing brand name.

The acquisition would create a uniform company with more than 1 million customers, reducing the companies' combined costs by up to $140 million a year within four years.

With annual revenue of approximately $1 billion, Minnesota-based G&K is a service-focused provider of branded uniform and facility services programs in the US and Canada.

Ohio-based Cintas designs, manufactures and implements corporate identity uniform programs and provides entrance mats, restroom supplies, first aid, safety and fire protection products and services.

The Nasdaq-listed company has grown consistently for the past nine years and generated revenue of $4.9 billion last year.

Cintas said that the combined company will provide innovative products and caring service to over 1 million business customers and the merger will provide access to additional processing capacity.