Trading in the stock of industrial uniform and workwear company UniFirst (UNF +0.57%) was uncharacteristically lively on Monday. That's because the company has received a formal buyout offer from a well-known peer. After digesting the news, investors rushed into UniFirst stock, sending it up by more than 16% on the day.
Trying on for size
That morning, Cintas announced it had offered to acquire all common and Class B UniFirst shares for a price of $275 per share. This bid was submitted to UniFirst's board of directors on Dec. 12, Cintas added. The would-be acquirer emphasized that its price represented a 64% premium to UniFirst stock's 90-day average as of the previous day.
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Shortly after this announcement, UniFirst publicly confirmed it had received Cintas's offer. It said that it is "carefully reviewing and evaluating the proposal to determine the course of action that it believes is in the best interests of the company, its shareholders and other stakeholders."
UniFirst added that it has no intention of further commenting on Cintas's bid until said review is finalized. The company has retained financial sector notables Goldman Sachs and JPMorgan Chase's J.P. Morgan to advise it on the matter. It's also retained legal and strategic communications advisors.
NYSE: UNF
Key Data Points
An offer many won't refuse
This is one of the most synergistic buyouts I've seen lately, as Cintas is a dominant company in the uniform and related services space. Purchasing UniFirst, then, makes great strategic sense, and the price being offered is also compelling.
Existing UniFirst shareholders should hang on for the ride, as this deal probably has a good chance of going through. Upside potential will probably be much more limited for late buy-ins, though.
