Aligns with 2020 Vision of Long-Term Profitable Growth
Increases Annual Revenues by Approximately $1.1 Billion and Adjusted
EBITDA by Approximately $100 Million
Estimated Cost Synergies of Approximately $20 Million to $30 Million
NEW YORK--(BUSINESS WIRE)--
("the Company"), a leading provider of facility solutions, today
announced it has entered into a definitive agreement to acquire GCA
Services Group ("GCA") 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 leading 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
Scott Salmirs, President and Chief Executive Officer of ABM Industries,
commented, "This transformative and accretive acquisition will
accelerate our 2020 Vision by creating a broader platform upon which we
can grow profitably and further distinguish ABM as an industry-focused
solutions provider. We look forward to gaining insights from GCA, a
well-established industry leader with top talent. GCA's client-centric
goals and philosophies align closely with those of ABM, and we are
excited about the value this combination will bring to our clients, our
employees and our shareholders."
Bob Norton, Chairman, President and Chief Executive Officer of GCA,
commented, "We are excited to be joining the ABM family, which will
allow us to better serve our clients with more services and greater
reach. We believe our combination with a company that shares our vision
for profitable growth will lead to significant long-term value for all
The acquisition aligns with the core principles of ABM's 2020 Vision
strategy of achieving long-term profitable growth:
Industry-Focused Approach: The Company and GCA have
complementary organizational structures by industry group and the
combination will enhance ABM's presence in the Education market and
Commercial industry. The combined expertise in these areas will
reinforce ABM's 2020 Vision evolution from a facility solutions
provider managed by service line to an industry-focused organization.
Profitable Growth: GCA has a demonstrated track record of
longstanding revenue growth and profitability driven by its
industry-focused operational strategies. The acquisition is expected
to increase the overall margin profile of ABM and to solidify the
Company's 2020 Vision-driven, client-centric structure and strategy
for long-term profitable growth.
The ABM Way: The transaction will provide a broader platform
for ABM to implement its standard operating practices, which, when
combined with the best-in-class operations of GCA, will enhance the
Company's capabilities for its clients, and accelerate cross-selling
of its Technical Solutions and specialty engineering services.
Valuable Synergies: The acquisition is expected to produce cost
synergies in overhead and procurement, while also enabling greater
efficiencies in areas such as shared services and IT.
The acquisition of GCA is expected to accelerate ABM's ability to
enhance long-term shareholder value. While ABM intends to provide
greater detail surrounding the long-term financial impact of the
transaction after the acquisition closes, ABM expects:
Revenue contribution of approximately $1.1 billion and adjusted EBITDA
of approximately $100 million, respectively, after the first full year
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.
Annualized, run rate cost synergies of approximately $20 million to
$30 million, which are expected to be realized by the second full year
Total debt, including standby letters of credit, of approximately $1.5
billion, and total debt to proforma lender-adjusted EBITDA of
approximately 4.0x, as calculated under the Company's amended credit
agreement, which is not expected to impact ABM's current dividend
Under 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.
Following 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.
Josh Bresler, Managing Director of Thomas H. Lee Partners, L.P., stated,
"We would like to thank Bob Norton, the entire GCA management team and
the over 37,000 GCA employees for a tremendous partnership. 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."
Chris Crampton, Managing Director of Goldman Sachs Merchant Banking
Division, said, "The combined company will create a market leader in
facilities services, and will enable management to offer its customers
additional locations, services, expertise and resources." Mr. Crampton
continued, "We look forward to supporting Scott and the ABM management
team as they continue to successfully execute on their 2020 Vision."
ABM 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
J.P. Morgan Securities LLC is serving as exclusive financial advisor to
ABM. Jones Day and Davis, Polk and Wardwell are serving as its legal
Goldman Sachs and Kirkland & Ellis LLP are serving as GCA's financial
and legal advisors, respectively.
Fiscal Year Outlook
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.
ABM will host a conference call today at 8:30 AM (ET) to discuss the
transaction. The live conference call can be accessed via audio webcast
under the "Events & Presentations" section of ABM's Investor Relations
website, located at investor.abm.com, or by dialing (877) 451-6152
approximately 15 minutes prior to the scheduled time. A supplemental
presentation will be available on the Company's website.
A replay will be available approximately two hours after the recording
through July 19, 2017 and can be accessed by dialing (844) 512-2921 and
access ID # 13665707. An archive will also be available on the ABM
website for 90 days.
is a leading provider of facility solutions with revenues of
approximately $5.1 billion and over 100,000 employees in 300+ offices
throughout the United States and various international locations. ABM's
comprehensive capabilities include janitorial, electrical & lighting,
energy solutions, facilities engineering, HVAC & mechanical, landscape &
turf, mission critical solutions and parking, provided through
stand-alone or integrated solutions. ABM provides custom facility
solutions in urban, suburban and rural areas to properties of all sizes
- from schools and commercial buildings to hospitals, data centers,
manufacturing plants and airports. ABM Industries Incorporated, which
operates through its subsidiaries, was founded in 1909. For more
information, visit www.abm.com.
ABOUT GCA SERVICES GROUP, INC.
GCA Services Group, Inc. is a leading national provider of quality
facility services, including janitorial/custodial services,
contamination control for cleanroom manufacturing, facilities operations
and maintenance, grounds and athletic field management, diversified
staffing, and more. With over 37,000 employees, GCA serves over 930
clients in a variety of sectors, including K-12 schools, higher
education, corporate office buildings, manufacturing, high-tech,
bio-pharmaceutical, nuclear power, defense, energy & utilities,
warehouses and distribution centers, the rental car market, and others.
For more information, please visit www.gcaservices.com
or follow GCA on Twitter, @gcaservices.
ABOUT THOMAS H. LEE PARTNERS, L.P.
Thomas H. Lee Partners, L.P. ("THL") is one of the world's oldest and
most experienced private equity firms. Founded in 1974, THL has raised
over $22 billion of equity capital and invested in more than 140
portfolio companies with an aggregate value of over $150 billion. THL
invests in growth oriented businesses, headquartered primarily in North
America, across four sectors: Business & Financial Services, Consumer &
Retail, Healthcare, and Media, Information Services & Technology. THL
partners with portfolio company management to identify and implement
operational and strategic improvements to accelerate sustainable revenue
and profit growth.
ABOUT GOLDMAN SACHS MERCHANT BANKING DIVISION
Founded in 1869, Goldman Sachs is a leading global investment banking,
securities and investment management firm. The Goldman Sachs Merchant
Banking Division (MBD) is the primary center for the firm's long-term
principal investing activity. With nine offices across seven countries,
MBD is one of the leading private capital investors in the world with
equity and credit investments across 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.
Cautionary Statement under the Private Securities Litigation
Reform Act of 1995
This press release contains both historical and forward-looking
statements addressing the plan of ABM Industries Incorporated ("ABM"
and, together with its subsidiaries, collectively referred to as "ABM,"
"we," "us," "our," or the "Company") to acquire GCA Services Group
("GCA"). In this context, we make forward-looking statements related to
future expectations, estimates and projections that are uncertain, and
often contain words such as "anticipate," "believe," "could,"
"estimate," "expect," "forecast," "intend," "likely," "may," "outlook,"
"plan," "predict," "should," "target," or other similar words or
phrases. These statements are not guarantees of future performance and
are subject to known and unknown risks, uncertainties, and assumptions
that are difficult to predict. For us, particular uncertainties that
could cause our actual results to be materially different from those
expressed in our forward-looking statements include: (1) our ability to
successfully complete the proposed acquisition of GCA, including
satisfying closing conditions; (2) delay in closing the proposed
acquisition of GCA; (3) the occurrence of any event that could give rise
to termination of the merger agreement; (4) risks inherent in the
achievement of cost synergies and the timing thereof; (5) risks related
to the disruption of the proposed acquisition to GCA and its management;
(6) the effect of announcement of the proposed acquisition on GCA's
ability to retain and hire key personnel and maintain relationships with
clients, suppliers and other third parties; (7) our ability to
successfully integrate GCA if the proposed acquisition is completed,
including whether and to what extent the proposed acquisition will be
accretive and within the expected timeframe; (8) changes to our
businesses, operating structure, financial reporting structure, or
personnel relating to the implementation of our 2020 Vision strategic
transformation initiative; (9) increases in estimates of ultimate
insurance losses; (10) uncertainty in future cash flows; (11) challenges
preserving long-term client relationships, passing through costs to
clients, responding to competitive pressures, and retaining qualified
personnel; (12) impairment of goodwill and long-lived assets; (13)
changes in immigration laws or enforcement actions or investigations
under such laws; (14) significant delays or reductions in appropriations
for our government contracts; (15) losses or other incidents at
facilities in which we operate; and (16) liabilities associated with
participation in multiemployer pension plans. The list of factors above
is illustrative and by no means exhaustive. Additional information
regarding these and other risks and uncertainties we face is contained
in our Annual Report on Form 10-K for the year ended October 31, 2016
and in other reports we file from time to time with the Securities and
Exchange Commission (including all amendments to those reports). We urge
readers to consider these risks and uncertainties in evaluating our
forward-looking statements. We caution readers not to place undue
reliance upon any such forward- looking statements, which speak only as
of the date made. We undertake no obligation to publicly update any
forward-looking statements, whether as a result of new information,
future events, or otherwise, except as required by law.
Use of Non-GAAP Financial Information
The Company has presented, in this press release, an estimate for
GCA's adjusted EBITDA contribution and total debt to proforma
lender-adjusted EBITDA, which includes an estimate for adjusted EBITDA
related to GCA. Adjusted EBITDA is a non-GAAP financial measure which
represents earnings before interest, taxes, depreciation, amortization
and other adjustments. Lender-adjusted EBITDA is a non-GAAP financial
measure utilized in the financial covenants contained in the Company's
credit agreement. GCA uses adjusted EBITDA as a measurement of financial
results and as an indication of the relative strength of operating
performance. The Company's estimate of GCA's adjusted EBITDA and
lender-adjusted EBITDA are based only on projected financial information
available as of the date hereof. These non-GAAP financial
measures are not intended to replace the presentation of financial
results in accordance with U.S. GAAP. These non-GAAP financial
measures may not be comparable to similar measures used by other
companies and may exclude certain nondiscretionary expenses and reflect
other adjustments. Reconciliations of these forward-looking
non-GAAP financial measures to the most directly comparable GAAP
financial measures are not provided because the Company is unable to
provide such reconciliations without unreasonable effort, due to the
uncertainty and inherent difficulty of predicting the occurrence and the
financial impact of information concerning amounts of certain items
excluded from adjusted EBITDA and lender-adjusted EBITDA, such as
amortization and taxes and items impacting comparability, which are not
determinable on a forward-looking basis at this time.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170712005440/en/
Investor & Media Relations:
Susie A. Choi, (212)
Source: ABM Industries
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