EnviroStar, Inc. (NYSE MKT: EVI), a distributor of commercial laundry and dry cleaning equipment since 1959, recently announced the execution of a definitive asset purchase agreement to acquire Western State Design LLC, a large wholesaler of commercial, industrial, and coin-operated laundry products. The deal, which is expected to be wrapped up within the next 30 to 45 days, is still subject to financing conditions and shareholder approval. However, the expectation that the acquisition would be accretive to EVI’s earnings in its current fiscal year ending June 30, 2017, has already made an impact. EVI’s share price rose by 38 percent after the merger was made public.
The agreed purchase price is $28.0 million, of which $18.0 million will be paid in cash at the closing and $10.0 million will be paid in shares of EVI’s common stock. About one-third ($6 million) of the cash portion of the purchase price will be funded by a private sale of 1,290,323 shares of EVI’s common stock to Symmetric Capital II LLC, at $4.65 per share, which was the closing price of EVI’s common stock on the NYSE MKT on September 6, 2016. Symmetric Capital II LLC is a company controlled by EVI’s chairman and chief executive officer, Henry M. Nahmad. The balance of the cash portion of the purchase price, amounting to about $12 million, will be funded by commercial bank credit.
The total number of shares of common stock to be issued to Western State Design will be 2,044,990. The maximum number of shares of EVI’s common stock to be issued at close of the agreement will not exceed 19.9 percent of the total number of shares of EVI’s common stock outstanding at the time of closing. EnviroStar will seek shareholder approval if an issuance of shares beyond this amount is necessary.
In a news release, Henry M. Nahmad, EVI’s chairman and chief executive officer, remarked:
“We are thrilled to welcome Dennis Mack, Tom Marks, and all of the employees of Western State Design to the EVI family. We recognize that Western State Design’s success is based on a thriving entrepreneurial culture, strong customer relationships, dedicated employees, and a commitment to exceptional service. For those reasons and others, we believe that the addition of Western State Design to the EVI family will benefit EVI and its customers, employees, and stockholders.”
Western State Design is a leading distributor of commercial and industrial laundry equipment. It has increased its revenues, profitability, and market share under the joint leadership of Dennis Mack and Tom Marks, generating about $60 million in revenue for the 12-month period ended December 31, 2015.
The Hayward, California-based company, founded in 1974, distributes a comprehensive line of commercial and industrial laundry equipment and related parts for new laundry facilities and for the replacement laundry market. It operates on an exclusive basis in California, Oregon, Washington and Alaska, as well as parts of Nevada, Arizona and Idaho. The company has over 6,000 customers in the healthcare, hospitality, cruise line, correctional, government, and commercial and coin-operated laundry industries and has been recognized as one of the leading distributors and service providers in the industry.
Dennis Mack, president of Western State Design, and Tom Marks, executive vice president of Western State Design, jointly commented:
“On behalf of the entire team at Western State Design, we are very pleased to be joining the EVI family of commercial laundry businesses. EVI’s goal of becoming the industry’s largest and most versatile commercial laundry products distributor and service provider is promising, and we are aligned with EVI’s business plans and long-term growth strategy. We are also excited about the new opportunities our employees will have to continue their mission of providing superior products, exceptional service, and competitive pricing to our valued customers for many years into the future.”
EnviroStar, Inc. is a distributor of commercial laundry and dry cleaning equipment, industrial boilers, and related parts, supplies, and technical services. It is growing its North American market share through an aggressive buy-and-build strategy.
For more information, visit www.EnviroStarInc.com
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