By Nina Kienle
Elis confirmed it made a preliminary approach to U.S. uniform supplier Vestis regarding a potential acquisition that would give the French company access to the U.S. market.
Vestis didn't immediately respond to a request for comment. The Roswell, Ga.-based, company had a market capitalization of about $2 billion as of Thursday's close.
Elis, a Paris-based provider of workplace services and supplies, on Friday said it regularly considers a range of strategic opportunities and that there isn't an assurance that discussions will result in the signing of a transaction or agreement.
Any transaction would be in line with Elis's commitments to its shareholders, it said. The company would aim to maintain financial discipline in the amount paid for the acquisition, retain an investment-grade rating and seek a deal accretive to earnings from the first year, it said.
Elis's confirmation of the approach came after a press report of its interest in Vestis that sent its stock plunging. Shares in Elis were down 16% in late European trade Friday.
A potential acquisition would significantly expand Elis. The company, which operates in Europe and Latin America, generated revenue of 4.31 billion euros ($4.79 billion) last year. Meanwhile, Vestis's revenue in 2023 amounted to $2.825 billion.
Entering the U.S. presents an attractive opportunity, but buying Vestis would present several challenges for Elis, JPMorgan analysts said in a research note to clients. An equity raise would likely be required, as the company's balance sheet capacity seems insufficient for the deal given current debt levels, the analysts said.
Elis's net debt stood at 3.23 billion euros as of June 30.
Write to Nina Kienle at nina.kienle@wsj.com
(END) Dow Jones Newswires
September 06, 2024 11:22 ET (15:22 GMT)
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