Publicly-traded ABM Industries has agreed to acquire GCA Services Group from Thomas H. Lee Partners (THL) and Goldman Sachs Merchant Banking Division (GS) for approximately $1.25 billion in cash and stock. THL and GS acquired GCA Services from Blackstone in November 2015. In turn, Blackstone acquired GCA Services from Nautic Partners in November 2012.
Under the terms of the agreement, ABM will acquire GCA for $851 million in cash and $399 million in shares of ABM common stock. Following the closing of the transaction – which is expected by the end of September 2017 – THL and GS will own, in total, approximately 14% of ABM’s outstanding shares. ABM expects that the buy of GCA will increase its annual revenues by approximately $1.1 billion and increase adjusted EBITDA by approximately $100 million. This results in a 12.5x purchase price multiple.
GCA Services is a national provider of facility services – janitorial and custodial, contamination control for cleanroom manufacturing, facilities operations and maintenance, and athletic field management – to K-12 schools, higher education, corporate office buildings, manufacturing, high-tech, bio-pharmaceutical, nuclear power, defense, energy & utilities, warehouses and distribution centers, and the rental car market. The company has more than 930 clients and approximately 37,000 employees in 46 states, the District of Columbia, and Puerto Rico. GCA, led by CEO Bob Norton, was founded in 2003 and is headquartered in Cleveland (www.gcaservices.com).
“We would like to thank Bob Norton, the entire GCA management team and the over 37,000 GCA employees for a tremendous partnership,” said Josh Bresler, Managing Director of Thomas H. Lee Partners. “GCA is an incredible company with a proven track record of operating performance, safety and specialty market expertise. We are excited about the growth prospects of GCA as an important part of ABM, and look forward to benefiting from the combined company’s future upside.”
Thomas H. Lee Partners (THL) was founded in 1974 and is one of the oldest private equity investment firms in the United States. Industries of interest include consumer and healthcare, media and information services, and business and financial services. Since its founding, THL has raised approximately $20 billion of equity capital and invested in more than 130 businesses with an aggregate purchase price of more than $150 billion. The firm is based in Boston (www.thl.com).
The Goldman Sachs Merchant Banking Division is the investing entity for the firm’s long-term principal investing activity. The division has nine offices across seven countries and makes equity and credit investments in corporate, real estate, and infrastructure strategies. Since 1986, the group has invested approximately $180 billion of levered capital across a number of geographies, industries and transaction types. The division is headquartered in New York (click HERE for the division’s webpage).
ABM (NYSE:ABM) is a provider of facility services including janitorial, electrical & lighting, engineering, HVAC & mechanical, landscape & turf, and parking. Customers include schools and commercial buildings, hospitals, data centers, manufacturing plants and airports. The company has annual revenues of approximately $5.1 billion and over 100,000 employees in approximately 300 offices throughout the United States and 20 international locations. ABM was founded in San Francisco in 1909 by Morris Rosenberg as a single-person window washing business. The company took the name American Building Maintenance in 1913. Today the company is headquartered in New York (www.abm.com).
ABM plans to fund the cash portion of the purchase price and transaction expenses through its amended revolving credit facility, in addition to a five-year amortizing term loan. JPMorgan Chase and BofA Merrill Lynch have committed to provide the financing for the transaction.
© 2017 Private Equity Professional | July 12, 2017
