ABM Industries To Buy GCA Services For About $1.25 Bln In Cash And Stock

(RTTNews) - ABM Industries Inc. (ABM) said that it agreed to acquire GCA Services Group from affiliates of Thomas H. Lee Partners, L.P. and Goldman Sachs Merchant Banking Division for approximately $1.25 billion in cash and stock.

GCA is a provider of facility services in the education and commercial industries, specializing in facilities maintenance, janitorial services, grounds management, vehicle services and outsourced workforce solutions. With over 37,000 employees in 46 states, the District of Columbia, and Puerto Rico, GCA is headquartered in Cleveland, OH.

As per the terms of the agreement, ABM will acquire GCA for $851 million in cash and $399 million in shares of ABM common stock subject to customary adjustments for working capital and net debt.

The transaction is expected to close by September 2017, subject to customary closing conditions including required regulatory approvals. ABM expects to incur approximately $70 million in one-time, transaction-, synergy-, and integration-related costs.

Upon the closing of the transaction, affiliates of Thomas H. Lee Partners, L.P. and Goldman Sachs Merchant Banking Division will own, in the aggregate, approximately 14% of ABM's outstanding shares and will enter into a shareholders agreement with the Company providing for, among other things, customary standstill and voting obligations, transfer restrictions and registration rights.

ABM said it plans to fund the cash portion of the purchase price and transaction expenses via its amended revolving credit facility, in addition to a five-year amortizing term loan. JPMorgan Chase Bank, N.A. and BofA Merrill Lynch have committed to provide the financing for the transaction.

The acquisition of GCA is expected to accelerate ABM's ability to enhance long-term shareholder value. ABM expects revenue contribution of approximately $1.1 billion and adjusted EBITDA of approximately $100 million, respectively, after the first full year of ownership; revenue increase of approximately $600 million within the Education industry group, with the remaining $500 million to be allocated to other key industry groups during the integration process.

ABM expects annualized, run rate cost synergies of about $20 million to $30 million, which are expected to be realized by the second full year of ownership.

ABM said there are no changes to the Company's fiscal year outlook at this time. Upon closing, the Company anticipates changes in certain metrics, such as amortization expense and interest expense, given the size of the transaction. The Company also expects to incur certain, one-time transaction, synergy, and integration-related expenses, following the closing of the transaction.