Standard Parking Corp. (STAN), which manages 1.2 million parking spaces across North America, rose 2.9 percent after agreeing to buy Central Parking Corp. (3306180Q) from private-equity interests to almost double its holdings.
The shares rose 51 cents to $18.05 in New York trading. They have gained 1 percent this year, less than the 8.6 percent increase in the Standard & Poor’s 500 Index.
The deal is valued at about $348 million, Chicago-based Standard Parking said today. That includes $111 million in stock, based on the value of trading in the past 20 days, as well as $27 million in cash and $210 million of assumed debt, Standard Parking said in a statement. Central Parking is owned by affiliates of private-equity firm Kohlberg & Co., Lubert- Adler Partners LP and Versa Capital Management LLC.
The combined company will have a “dominant position” in the U.S. parking industry, said Nathan Brochmann, an analyst at Chicago-based William Blair & Co.
“This really is a size-and-scale business,” Brochmann said in a telephone interview. “Over the course of time, there’s going to be a lot more upside to this potential deal.”
A telephone message for Rick West, a spokesman for Central Parking, wasn’t immediately returned. James Kohlberg, chairman of Kohlberg & Co.; Ira Lubert, co-founder of Lubert-Adler; and Gregory Segall, chief executive officer of Versa Capital, also didn’t immediately return calls.
“We believe this is a transformative transaction that will expand our location footprint” and “provide significant cost synergies,” James Wilhelm, Standard Parking’s chief executive officer, said on a conference call today.
The combined company, to be based in Chicago, will realize about $20 million in annual savings beginning in the second year after the acquisition, Standard Parking said. The workforce of more than 25,000 probably will be reduced by less than 2 percent, and the deal will add to per-share earnings within three years, the company said.
The transaction is scheduled for completion in the third quarter. Kohlberg and its partners bought Nashville, Tennessee- based Central Parking in 2007.
Parking in Standard’s hometown has lured other investment firms as well. In 2008, the city of Chicago leased its parking- meter system to a Morgan Stanley-led partnership for $1.15 billion. The agreement runs for 75 years.
Morgan Stanley (MS), Abu Dhabi Investment Authority and Allianz Capital Partners may have earnings of $9.58 billion before interest, taxes and depreciation, according to documents in 2010 related to a $500 million private note sale by their Chicago Parking Meters LLC venture.
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