Janitorial Firm ABM To Acquire Rival GCA -- WSJ

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 12, 2017).

ABM Industries Inc., one of the nation's largest providers of janitorial and building services, is near a deal to acquire privately held rival GCA Services Group for $1.25 billion in cash and stock, according to people familiar with the matter.

A deal could be announced as soon as Wednesday, the people said. The tie-up, which will expand New York-based ABM's reach in the educational and commercial markets, is expected to close by September after any regulatory hurdles are cleared.

GCA, based in Ohio, has traded hands a few times in recent years. It is currently owned by Goldman Sachs Group Inc. and private-equity firm Thomas H. Lee Partners LP. GCA was acquired from Blackstone Group LP in 2016. Terms of that deal weren't given. Blackstone bought GCA in 2012 from a group led by investment firm Nautic Partners LLC for an undisclosed sum.

ABM, which has a market value of about $2.2 billion, will pay $850 million in cash and $400 million in common stock for GCA, the people said. ABM will incur a $70 million charge in connection with the deal, and it is expected to add about $1.1 billion in revenue after a year, with $600 million coming in the education industry group.

ABM provides cleaning, parking and maintenance, among other services, to office buildings and other facilities. GCA provides similar custodial services and has aggressively expanded into public schools.

The combined company will have a total of 137,000 employees. In 2016, ABM's annual revenue rose 5% to $5.14 billion from a year earlier. Last month, the company unloaded its government-services business for $35.5 million to Valiant Integrated Services LLC.

Shares of ABM have climbed 9.8% over the past 12 months. On Tuesday, they closed up a penny at $40.69.

Write to Ezequiel Minaya at ezequiel.minaya@wsj.com

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July 12, 2017 02:47 ET (06:47 GMT)