08.10.2007 06:30:00
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ABM Industries Incorporated to Acquire OneSource Services Inc.
ABM Industries Incorporated (NYSE: ABM), a leading facilities services
contractor, and OneSource Services Inc. (London AIM: OSS) ("OneSource”)
announced today that they have signed a definitive agreement under which
ABM will acquire OneSource for $365 million in cash. OneSource provides
outsourced facilities services, including janitorial, landscaping,
general repair and maintenance and other specialized services, for more
than 10,000 commercial, industrial, institutional and retail accounts in
the U.S.
The transaction combines two valuable facilities services platforms to
create the scale, breadth and financial strength necessary to grow in
the increasingly competitive and global service provider marketplace.
"We saw an opportunity to accelerate our
growth strategy and we seized it,” said Henrik
Slipsager, ABM president and chief executive officer. "Consistent
with our long-held commitment to increasing shareholder value, the
acquisition of OneSource complements our strategy and further
strengthens our growth prospects.”
The transaction, which is subject to regulatory and other customary
approvals, is expected to close in November 2007. The agreement has been
approved by the boards of directors of both companies. Lord Ashcroft
KCMG, OneSource’s Chairman who has an interest
in approximately 74 per cent of the issued share capital of OneSource,
has signed a resolution approving the transaction. No other shareholder
approvals are required.
For the trailing 12-month period that ended June 30, 2007, OneSource’s
sales and adjusted EBITDA were approximately $828 million and $8
million, respectively.
"Beginning after closing and continuing over
the following year, we expect to drive OneSource’s
business to realize operating margins consistent with our janitorial
division,” Slipsager said. "Our
janitorial division has been ABM’s best and
most consistent performer in recent years, and this investment will
provide that team a broader base to continue domestic expansion.”
ABM expects to operate the combined company with annual run-rate cost
synergies of between $45 and $50 million, which are expected to be fully
implemented within 12 months after closing. The company expects to
achieve $28 million to $32 million worth of cost synergies in fiscal
year 2008, assuming a November 2007 closing. The synergies, which were
identified jointly by the two companies, will be achieved primarily
through a reduction in duplicative positions and back office functions,
the consolidation of facilities and elimination of professional fees and
other services.
The company anticipates that the transaction will be accretive to its
earnings on a GAAP basis beginning in the second fiscal quarter after
closing – excluding one-time implementation
costs of between $12 million and $15 million, all of which will be
incurred in fiscal year 2008.
ABM expects to realize tax benefits from acquiring net operating loss
carry forwards of approximately $195 million and from deducting existing
goodwill amortization, together expected to initially total $14 million
in annual tax cost savings.
"Importantly, this acquisition solidifies our
position domestically,” Slipsager continued. "Clients
today are demanding a range of facilities services from a single source
and increasingly seek a company with this depth of capabilities within a
broad geographic reach. Any company that wants to be a serious player in
an increasingly globalized market must have a strong base in the U.S.,
demonstrated by the entry of several international firms into the U.S.
in the last year. We believe that further expanding our domestic base
will enhance our ability to compete globally in the coming years.
"We remain committed to providing the best
service to our customers, the best value for our shareholders and the
greatest opportunities for our employees. OneSource employees are among
the best people in the industry, and we anticipate benefiting not just
from acquiring OneSource’s business, but also
from gaining their world-class personnel. We look forward to working
together with our new colleagues,” Slipsager
concluded.
Lord Ashcroft said, "This is the right move
at the right time for OneSource, our clients and our employees. ABM
shares our commitment to world-class facilities services and customer
satisfaction, and I am proud that OneSource, which has some of the best
people in the business, will play an integral role in making ABM even
more competitive in an increasingly globalized market.”
Following completion of the transaction, the combined company will
operate under the ABM name. It will provide a full range of services,
including janitorial, parking, security, engineering, landscaping and
lighting services for commercial, industrial, institutional, and retail
facilities for its customers in the United States and Puerto Rico, as
well as in British Columbia, Canada.
Lazard Frères & Co. LLC is acting as
financial advisor to ABM.
Jones Day is acting as ABM's legal counsel and Allen & Overy LLP is
providing legal counsel to OneSource.
Investor Conference Call and Webcast
On Monday, October 8, 2007 at 8:30 a.m. (ET), ABM will host a live
webcast to discuss the pending OneSource acquisition with remarks by ABM
president and CEO Henrik Slipsager and ABM Executive VP and CFO George
Sundby. The webcast will be accessible at: http://www.irconnect.com/primecast/07/kekst_confcall.html.
Informational slides that will accompany the live webcast presentation
will be made available on ABM’s website (www.abm.com)
prior to the call. Listeners are asked to be online at least 15 minutes
early to register, as well as to download and install any complimentary
audio software that might be required. Following the call, the webcast
will be available at the above URL, a link to which will be posted on www.abm.com,
for a period of 90 days.
In addition to the webcast, a limited number of toll-free telephone
lines will also be available for listeners who are among the first to
call (888) 576-5507 within 15 minutes before the event and enter ID #
18957894. Telephonic replays will be accessible two hours after the
broadcast and will be available through October 15, 2007 by dialing
(800) 642-1687 or (706) 645-9291 and entering ID # 18957894.
About OneSource
OneSource is a leader in the outsourced facilities services sector in
the U.S. and provides janitorial, landscaping, general repair and
maintenance and other specialized services for more than 10,000
commercial, institutional and industrial accounts.
OneSource differentiates its service offering through total cost
management solutions, client specification re-engineering initiatives
and other market leading programs such as OneSource GreenSweep™
which is environmentally designed to meet the requirements of green
building operations.
About ABM
ABM Industries Incorporated (NYSE:ABM) is among the largest facility
services contractors listed on the New York Stock Exchange. With fiscal
2006 revenues in excess of $2.7 billion and more than 75,000 employees,
ABM provides janitorial, parking, security, engineering and lighting
services for thousands of commercial, industrial, institutional and
retail facilities in hundreds of cities across the United States and
British Columbia, Canada. The ABM Family of Services includes ABM
Janitorial Services; Ampco System Parking; ABM Security Services; ABM
Facility Services; ABM Engineering; and Amtech Lighting Services.
Cautionary Statement Under the Private
Securities Litigation Reform Act of 1995
This press release contains forward-looking statements that set forth
management's anticipated results based on management's plans and
assumptions. Any number of factors could cause the Company's actual
results to differ materially from those anticipated. These risks and
uncertainties include, but are not limited to: (1) the possibility that
the proposed OneSource merger may not be completed; (2) the risk that
the businesses will not be integrated successfully; (3) the risk that
the cost savings and synergies from the merger may not be fully realized
or may take longer to realize than expected; (4) the risk that
disruption from the merger may make it more difficult to maintain
relationships with clients; (5) the risk that the merger may involve
unexpected costs; (6) the possibility that the businesses may suffer as
a result of the merger; and (7) other issues and uncertainties beyond ABM’s
or OneSource's control. Additional information regarding these and other
risks and uncertainties ABM faces is contained in ABM's Annual Report on
Form 10-K for the year ending October 31, 2006 and quarterly reports on
Form 10-Q filed since such date and in other reports it files from time
to time with the Securities and Exchange Commission. Neither ABM nor
OneSource undertakes any obligation to publicly update forward-looking
statements, whether as a result of new information, future events or
otherwise.
Non-GAAP Financial Measures
To supplement financial information presented on a GAAP basis, ABM uses
non-GAAP measures. The non-GAAP measures are presented with the intent
of providing both management and investors a better understanding of the
underlying operational results and trends, ABM's marketplace performance
and as one method to estimate a purchase price for companies ABM intends
to acquire. In addition, the non-GAAP measures are among the primary
indicators management uses as a basis for planning and forecasting
future periods. The presentation of these additional measures is not
meant to be considered in isolation or as a substitute for measures
prepared in accordance with generally accepted accounting principles in
the United States and, as presented, may not be comparable to other
similarly titled measures of other companies. Non-GAAP measures are
subject to inherent limitations because they do not include all of the
expenses included under GAAP and because they involve the exercise of
judgment of which charges are excluded from the non-GAAP financial
measure. Management compensates for this limitation by providing a
reconciliation of these measures to GAAP net income.
Non-GAAP Reconciliation
($ in millions)
ABM OneSource Pro Forma Combined
GAAP Net Income
$99.0
($1.9)
$97.1
Interest Income/(Expense)
(2.2)
(0.3)
(2.5)
Taxes
64.9
1.0
65.9
EBIT
161.7
(1.2)
160.5
Withdrawal Liability (a)
---
4.1
4.1
World Trade Center Gain (b)
(80.0)
---
(80.0)
Adjusted EBIT
81.7
2.9
84.6
Synergies (c)
---
47.5
47.5
Adjusted EBIT with Synergies $81.7 $50.4 $132.1
EBIT
161.7
(1.2)
160.5
Depreciation and Amortization
24.7
5.0
29.7
Withdrawal Liability (a)
---
4.1
4.1
World Trade Center Gain (b)
(80.0)
---
(80.0)
Adjusted EBITDA
106.4
7.9
114.3
Synergies (c)
---
47.5
47.5
Adjusted EBIDTA With Synergies
$106.4 $55.4 $161.8
Note: ABM LTM as of 7/31/2007 and OneSource LTM as of 6/30/2007.
(a) In fiscal year 2007, OneSource established a $4.1 million
liability relating to a 2005 claim it received from a certain
multi-employer pension plan alleging that OneSource has a
liability arising out of its former participation in such plan.
(b) The World Trade Center formerly represented the Company's
largest job-site. Litigation against the Company's insurance
carrier regarding business interruption was settled on August 15,
2006 for $80.0 million.
(c) Reflects midpoint of run-rate synergy range, on a pre-tax
basis. For purposes of these materials, synergies have been
allocated 100% to OneSource to represent the incremental impact on
ABM as a result of the transaction.
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