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ABM Likely to Buy GCA Services to Boost Education Foothold
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Facility management provider ABM Industries Incorporated (ABM - Free Report) is expected to announce a deal to acquire the privately-held rival, GCA Services Group Inc., worth $1.25 billion.
The deal is likely to expand the company’s foothold in the educational and commercial markets. Per sources familiar with the matter, the transaction is expected to close by September.
Founded in 2003, GCA Services is a leading national provider of quality facility services. It is a collaboration of various regional companies. GCA Services derives majority of its revenues from the education sector and aims to grow further as more school districts outsource their facility management to find savings to invest in teachers and equipment.
GCA Services has traded hands a couple of times in the recent years. The company is currently owned by The Goldman Sachs Group Inc. (GS - Free Report) and private-equity firm, Thomas H. Lee Partners LP. It was acquired from The Blackstone Group L.P. (BX - Free Report) in 2016, which had bought the company in 2012 from a group led by investment firm, Nautic Partners LLC.
ABM, with a market value of $2.2 billion, is likely to pay $850 million in cash and $400 million in stock for GCA Services. ABM will initially incur a $70 million charge in connection with the deal. However, the company expects to add about $1.1 billion in revenues one year after the completion of the deal, with $600 million from the education industry.
This deal will help ABM enhance its service offerings as both the companies offer similar services. However, GCA Services provides its service to schools which would be an added advantage for ABM, since the company can expand its presence in the educational sector.
On completion of the deal, ABM will have 137,000 employees. For full-year 2016, ABM's annual revenues rose 5% to $5.14 billion from the year-ago period. ABM has outperformed the Zacks categorized Building Products - Maintenance Service industry in the last one month, with an average loss of 1.7% compared with a decline of 3.6% for the latter. The company plans to grow through strategic acquisitions and organic initiatives while maintaining desirable profit margins. ABM’s comprehensive, strategic and transformative initiatives are focused on driving sustainable profitability by effectively allocating resources to higher margin services and business verticals with a strong competitive edge. Management also reiterated that corporate restructuring initiatives are well on track to yield sustained long-term growth momentum.
Bunzl has a long-term earnings growth expectation of 3.2% and is currently trading at a forward P/E of 20 x.
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ABM Likely to Buy GCA Services to Boost Education Foothold
Facility management provider ABM Industries Incorporated (ABM - Free Report) is expected to announce a deal to acquire the privately-held rival, GCA Services Group Inc., worth $1.25 billion.
The deal is likely to expand the company’s foothold in the educational and commercial markets. Per sources familiar with the matter, the transaction is expected to close by September.
Founded in 2003, GCA Services is a leading national provider of quality facility services. It is a collaboration of various regional companies. GCA Services derives majority of its revenues from the education sector and aims to grow further as more school districts outsource their facility management to find savings to invest in teachers and equipment.
GCA Services has traded hands a couple of times in the recent years. The company is currently owned by The Goldman Sachs Group Inc. (GS - Free Report) and private-equity firm, Thomas H. Lee Partners LP. It was acquired from The Blackstone Group L.P. (BX - Free Report) in 2016, which had bought the company in 2012 from a group led by investment firm, Nautic Partners LLC.
ABM, with a market value of $2.2 billion, is likely to pay $850 million in cash and $400 million in stock for GCA Services. ABM will initially incur a $70 million charge in connection with the deal. However, the company expects to add about $1.1 billion in revenues one year after the completion of the deal, with $600 million from the education industry.
This deal will help ABM enhance its service offerings as both the companies offer similar services. However, GCA Services provides its service to schools which would be an added advantage for ABM, since the company can expand its presence in the educational sector.
On completion of the deal, ABM will have 137,000 employees. For full-year 2016, ABM's annual revenues rose 5% to $5.14 billion from the year-ago period. ABM has outperformed the Zacks categorized Building Products - Maintenance Service industry in the last one month, with an average loss of 1.7% compared with a decline of 3.6% for the latter. The company plans to grow through strategic acquisitions and organic initiatives while maintaining desirable profit margins. ABM’s comprehensive, strategic and transformative initiatives are focused on driving sustainable profitability by effectively allocating resources to higher margin services and business verticals with a strong competitive edge. Management also reiterated that corporate restructuring initiatives are well on track to yield sustained long-term growth momentum.
ABM currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the industry is Bunzl plc (BZLFY - Free Report) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Bunzl has a long-term earnings growth expectation of 3.2% and is currently trading at a forward P/E of 20 x.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>