Cintas (ctas), which sells and leases uniforms, said it would buy smaller rival G&K Services (gk-services) for about $2.2 billion, including debt, to strengthen its presence in the United States and Canada.
Cintas’s offer of $97.50 per share represents a premium of about 19% to G&K’s Monday close.
G&K Services shares jumped 18% to $96.97 in premarket trading on Tuesday, while Cintas’ shares were up 5.5%.
Cintas will pay $1.93 billion in cash, according to Reuters calculations. G&K’s long-term debt, net of current maturities, stood at $240.45 million as of March 26.
Cincinnati-based Cintas provides uniforms, floor care, restroom supplies, first aid and safety products, fire extinguishers and testing, and safety and compliance training to a variety of industries.
The deal is expected to generate annual savings of $130 million to $140 million, realized in the fourth year after closing, Cintas said.
The company expects the deal to close in the next four to six months.