Cintas Corporation (NASDAQ:CTAS) announced plans to acquire UniFirst Corporation (NYSE:UNF) for $310 per share, in a transaction valued at approximately $5.5 billion, comprising 50% cash and 50% stock.
The deal represents an acquisition multiple of roughly 16.6 times UniFirst’s last twelve months earnings before interest, taxes, depreciation and amortization (EBITDA).
According to analysts at UBS, the transaction could significantly expand Cintas’ footprint in the uniform rental and laundry services market. The acquisition would increase Cintas’ laundry facility count by about 50% and raise revenue by roughly 20%, creating opportunities for operational optimization.
UBS analysts also noted the potential for substantial synergies. Cintas projects $375 million in cost and operational synergies over four years, which could more than double UniFirst’s EBITDA of $332 million and result in a synergized transaction multiple of approximately eight times.
UBS analysts highlighted that the acquisition could shift market focus to Cintas’ execution capabilities. “The transaction likely shifts the stock narrative to executing over the near-term,” the analysts wrote, pointing to recent investor concerns about payroll and AI as less relevant in the context of the deal.
The analysts also estimated that the acquisition would be accretive to Cintas’ earnings per share by around 10% by year four, taking into account customer churn, expected cost savings, and debt repayment. Cintas’ strong track record of integrating acquisitions, such as its prior G&K transaction, was cited as precedent for potential multi-year margin expansion.
Regulatory review may be required. UBS noted that the Federal Trade Commission is likely to examine the deal, given the combined share in the uniform rental market. Cintas has indicated that the relevant market should include all workwear, both rented and purchased, a position that previously supported approval of past acquisitions.
Cintas recently reported strong organic growth in its fiscal third quarter, with an 8.2% increase in revenues, ahead of analyst expectations of 7.6%. The growth marks the company’s third consecutive quarter of strong top-line performance, underscoring its operational execution amid broader labor market trends.
UBS assigned a ‘Buy’ rating to Cintas, with a 12-month price target of $235, indicating potential upside of approximately 18% from current levels. UniFirst shares traded hands at $276 on Thursday afternoon.