Cintas Submits Proposal to Acquire UniFirst for $275 per Share, Valuing Company at Approximately $5.3 Billion

The acquisition proposal submitted by Cintas Corporation (NASDAQ:CTAS) to acquire all outstanding shares of UniFirst Corporation (NYSE:UNF) has sent UniFirst's stock price skyrocketing on Tuesday. According to the press release issued by Cintas, the company is offering a staggering $275 per share in cash for each UniFirst share, representing a 46% premium to UniFirst’s ninety-day average closing price as of January 6, 2025.

This offer values UniFirst at approximately $5.3 billion, making it one of the most significant acquisitions in the industry to date. It's worth noting that this is not Cintas' first attempt to acquire UniFirst. The company had previously made a proposal of $255 per share on February 7, 2022, which was also rejected by UniFirst's board.

Todd Schneider, President and CEO of Cintas, emphasized the strategic fit between the two companies in an official statement released alongside the acquisition proposal. According to Schneider, the combination would drive growth through enhanced technology investments, processing capacity, and greater route density. "We believe that this transaction represents a compelling opportunity for UniFirst shareholders to realize significant value," Schneider said.

Cintas also highlighted the benefits of the proposed merger in terms of creating significant operational synergies and benefiting both companies' shareholders. The company assured that it is 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 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.

Why Cintas Believes the Acquisition Will Create Value

Cintas believes that the proposed merger will create significant operational synergies and benefit both companies' shareholders in several ways:

• Enhanced Technology Investments: By combining resources, Cintas and UniFirst can invest more in technology to drive growth and improve efficiency.
• Increased Processing Capacity: The acquisition would allow Cintas to expand its processing capacity, enabling it to meet growing demand from customers.
• Greater Route Density: With the combined fleet of vehicles, Cintas can increase route density, reducing transportation costs and improving service levels.

Cintas' Commitment to a Smooth Regulatory Review Process

Cintas has assured that it is committed to a smooth regulatory review process. The company has stated that there are no financing contingencies associated with the offer, as it will be financed through Cintas’ cash on hand, committed lines of credit, or other available funding sources.

What This Means for UniFirst Shareholders

UniFirst shareholders stand to gain significantly from the proposed merger. With the acquisition price of $275 per share representing a 46% premium to UniFirst’s ninety-day average closing price as of January 6, 2025, investors are likely to benefit from the transaction.

The proposed merger has sent UniFirst's stock price skyrocketing, with shares trading higher by 31.8% to $223.18 at last check Tuesday.

Conclusion

The acquisition proposal submitted by Cintas Corporation (NASDAQ:CTAS) to acquire all outstanding shares of UniFirst Corporation (NYSE:UNF) for $275 per share has significant implications for the industry and investors alike. With a valuation of approximately $5.3 billion, this transaction represents one of the most substantial acquisitions in recent history.

Cintas believes that the proposed merger will create significant operational synergies and benefit both companies' shareholders through enhanced technology investments, increased processing capacity, and greater route density.

While UniFirst's board has previously rejected Cintas' attempts to engage in discussions, the company remains committed to a smooth regulatory review process. With no financing contingencies associated with the offer, investors can expect a seamless transition if the merger is approved.

The proposed merger has sent UniFirst's stock price soaring, with shares trading higher by 31.8% to $223.18 at last check Tuesday. As the industry continues to evolve, this transaction serves as a prime example of how strategic acquisitions can drive growth and create value for shareholders.