The leaders of Central Parking have signed an agreement to sell the Nashville-based company to rival operator Standard Parking, creating a company that will manage about 2 million parking spots around the country.
The cash-stock-and-debt transaction is valued at almost $350 million and calls for Chicago-based Standard (Ticker: STAN) to pay Central's private-equity firm shareholders — a consortium comprising Kohlberg & Co., Lubert-Adler Partners and Versa Capital Management — Standard stock that will have them own 28 percent of the combined company. Those three firms acquired Central Parking for $725 million in early 2007 but have since sold its overseas divisions and high-profile properties in New York.
The company's headquarters will be in Chicago, but Standard officials said in a statement that a "major support office" will remain in Nashville. Still, it's likely a number of local jobs will be lost as the company targets savings once the deal closes as expected in the third quarter.
"Effectively doubling the size of the company will allow us to save costs by eliminating duplicate infrastructure and leveraging the combined company's purchasing volume," said James Wilhelm, Standard's president and CEO. "We expect to generate annual run-rate cost synergies of at least $20 million by the end of the second year after closing. We're confident that we can achieve these cost efficiencies through a variety of measures, which will include a headcount reduction expected to be less than two percent of the combined work force."
Through the first nine months of 2011, Standard posted a profit of $14.3 million on revenues of $549 million. The company's market capitalization on Wednesday afternoon stood at about $280 million.