Cintas Corporation Announces Agreement with Shred-it International Inc. to Combine Document Shredding Businesses
The Newly formed Partnership will have over $600 million in Annual Revenues and Operate under the Shred-it name
Cintas Corporation to have 42% ownership of the Partnership and will receive $180 Million in Cash at Closing
CINCINNATI — March 19, 2014 — Cintas Corporation (Nasdaq:CTAS) announced today an agreement with the shareholders of Shred-it International Inc. to combine Cintas’ Document Shredding business with Shred-it’s Document Shredding business. Under the agreement, Cintas and Shred-it will each contribute its document shredding business to a newly formed partnership that will be owned 42% by Cintas and 58% by the shareholders of Shred-it. The combined entity will operate under the Shred-it brand and is expected to have annual revenues in excess of $600 million. In addition to its 42% ownership of the partnership, Cintas will receive approximately $180 million in cash at the closing of the transaction.
“We are confident that this transaction is the best path forward for our Document Shredding customers, our workforce and our shareholders,” said Scott D. Farmer, Cintas’ Chief Executive Officer. “Together, we expect that Cintas Document Shredding and Shred-it will be the industry leader, benefitting from increased scale, resources and strong cash flow to uniquely position the new company to provide world class information protection services to its customers.”
Following completion of the transaction, the combined company will be led by Vince DePalma, current President and Chief Executive Officer of Shred-it, who will become the President and Chief Executive Officer of the newly formed company, and Karen Carnahan, now President and Chief Operating Officer of Cintas’ Document Management Division, who will become Chief Operating Officer of the newly formed company.
Karen Carnahan stated, “The Cintas Document Shredding team is excited to join forces with Shred-it to create a global leader in document destruction services. Shred-it has been a strong and well respected competitor over the years, and we look forward to working together to bring innovative ideas and superior customer service to our combined customer base.”
The transaction, which was approved by Cintas’ Board of Directors, is expected to close before Cintas’ fiscal year end which is May 31, 2014, subject to the customary closing conditions and various approvals.
With regards to Cintas’ Global Document Storage and Imaging business, Cintas is currently exploring strategic opportunities for this business and will provide additional details in the future as appropriate.
Cintas will hold a conference call on Wednesday, March 19, 2014, after the market closes to discuss its third quarter fiscal 2014 results and this transaction. A live webcast of the call will be available to individual investors and the public beginning at 5:00pm, Eastern Time, on Wednesday, March 19, 2014.
The webcast will be available at www.Cintas.com (click on the webcast icon and then follow instructions). For those unable to listen to the live webcast, a replay will be available on the Company's web site beginning approximately two hours after the completion of the live call and will remain available for two weeks. Questions concerning the webcast or conference call should be directed to Judy Girty at (513) 573-4915 or firstname.lastname@example.org.
Headquartered in Cincinnati, Cintas Corporation provides highly specialized services to businesses of all types primarily throughout North America. Cintas designs, manufactures and implements corporate identity uniform programs, and provides entrance mats, restroom supplies, first aid, safety, fire protection products and services and document management services for over one million businesses. Cintas is a publicly held company traded over the Nasdaq Global Select Market under the symbol CTAS and is a component of the Standard & Poor’s 500 Index.
Shred-it is a world-leading information security company providing document destruction services that ensure the security and integrity of its clients’ private information. Shred-it has operations in 17 countries worldwide, servicing more than 180,000 global, national and local businesses, including the world’s top intelligence and security agencies, more than 500 police forces, 1,500 hospitals, 8,500 bank branches and 1,200 universities and colleges. For more information, please visit www.shredit.com.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe harbor from civil litigation for forward-looking statements. Forward-looking statements may be identified by words such as “estimates,” “anticipates,” “predicts,” “projects,” “plans,” “expects,” “intends,” “target,” “forecast,” “believes,” “seeks,” “could,” “should,” “may” and “will” or the negative versions thereof and similar words, terms and expressions and by the context in which they are used. Such statements are based upon current expectations of Cintas and speak only as of the date made. You should not place undue reliance on any forward-looking statement. We cannot guarantee that any forward-looking statement will be realized. These statements are subject to various risks, uncertainties, potentially inaccurate assumptions and other factors that could cause actual results to differ from those set forth in or implied by this Press Release. Factors that might cause such a difference include, but are not limited to, the ability and timing to satisfy the closing conditions to consummate the transaction with Shred-it, including the receipt of government and other approvals; the Shred-it partnership’s ability to promptly and effectively integrate the Cintas Document Shredding business with Shred-it’s Document Shredding business; the Shred-it partnership’s ability to realize any synergies from the combination of the Cintas Document Shredding business with Shred-it’s Document Shredding business; the ability to successfully explore strategic opportunities for the Cintas Global Document Storage and Imaging business; the possibility of greater than anticipated operating costs including energy and fuel costs, lower sales volumes, loss of customers due to outsourcing trends, the performance and costs of integration of acquisitions, fluctuations in costs of materials and labor including increased medical costs, costs and possible effects of union organizing activities, failure to comply with government regulations concerning employment discrimination, employee pay and benefits and employee health and safety, uncertainties regarding any existing or newly-discovered expenses and liabilities related to environmental compliance and remediation, the cost, results and ongoing assessment of internal controls for financial reporting required by the Sarbanes-Oxley Act of 2002, disruptions caused by the inaccessibility of computer systems data, the initiation or outcome of litigation, investigations or other proceedings, higher assumed sourcing or distribution costs of products, the disruption of operations from catastrophic or extraordinary events, the amount and timing of repurchases of our common stock, if any, changes in federal and state tax and labor laws, the reactions of competitors in terms of price and service and the ultimate impact of the Affordable Care Act. Cintas undertakes no obligation to publicly release any revisions to any forward-looking statements or to otherwise update any forward-looking statements whether as a result of new information or to reflect events, circumstances or any other unanticipated developments arising after the date on which such statements are made. A further list and description of risks, uncertainties and other matters can be found in our Annual Report on Form 10-K for the year ended May 31, 2013 and in our reports on Forms 10-Q and 8-K. The risks and uncertainties described herein are not the only ones we may face. Additional risks and uncertainties presently not known to us or that we currently believe to be immaterial may also harm our business.
For additional information, contact:
William C. Gale
Sr. Vice President-Finance and Chief Financial Officer
J. Michael Hansen
Vice President and Treasurer