CTAS - Uni-Second Request...Second Request For Attractive UniFirst Deal; Lower PT to $225

Research evidence excerpt

CTAS - Uni-Second Request...Second Request For Attractive UniFirst Deal; Lower PT to $225

Truist Securities

We estimate ~8% potential accretion from a UNF acquisition at $310/share by FY30 w/ static gross debt

and ~12% in our de-leveraging scenario. We believe the combination of multiple arbitrage and cost synergy

realization would be attractive for Cintas shareholders. In aggregate, we think incremental revenue synergies at

acquired UNF assets would begin to offset a likely initial spike in churn 12-24 months after close. Our estimates

assumed 6% churn at UNF post-acquisition, less than the experience following the G&K deal in 2017 (we

believe 8-10% of revenue churned) given fewer national competitors to take away business. Our model

assumed the transaction closed on the first day of FY27E for simplicity given CTAS’s target close date of

CY2H26. We add back integration expenses and acq-related amortization in our calculation of combined EPS.

Figure 1: CTAS/UNF Merger Model = 12% Accretive in Year 4

FY26E FY27E FY28E FY29E FY30E

Income Statement Assumptions Year 1 Year 2 Year 3 Year 4

CTAS Revenue (consensus) $11,232M $12,068M $12,947M $13,871M $14,833M

UNF Revenue (consensus) $2,596M $2,698M $2,817M $2,941M

Potential postmerger churn (cumulative) ($150M) ($150M) ($150M) ($150M)

Revenue Synergies (cumulative) $50M $100M $125M

Total Revenue $11,232M $14,514M $15,545M $16,638M $17,749M

CTAS EBITDA (consensus) $3,097M $3,358M $3,644M $3,923M $4,220M

UNF EARNINGS Quality Adjustment (annual) ($15M) ($16M) ($17M) ($18M)

Revenue Synergy Profits (cumulative) $10M $20M $25M

Initial Churn Headwind (cumulative) ($20M) ($20M) ($20M) ($20M)

UNF Adj. EBITDA (consensus) $347M $370M $394M $419M

Cost Synergy Cumulative Realization $75M $175M $275M $375M