Service Corp. International, an operator of funeral homes and cemeteries, agreed to buy Stewart Enterprises Inc. in a deal valued at $1.4 billion, five years after an attempt to take over its smaller rival was rejected.
The offer of $13.25 a share is 36 percent more than Stewart Enterprises’ closing price yesterday. The acquisition has been approved by the boards of both companies, according to a statement today.
Stewart Enterprises, founded in 1910, runs funeral homes in 24 states and employs about 5,000 people, according to its website. The combination is expected to have pro forma revenue of almost $3 billion and generate about $60 million in annual cost savings, the companies said today.
Service Corp. had tried and failed to buy Jefferson, Louisiana-based Stewart Enterprises in 2008 for $11 a share. The latter company rejected the deal and Service Corp. withdrew its offer after the two sides couldn’t agree on financing and price.
“Throughout its 100 year history and for the last five decades of Frank Stewart’s tremendous leadership, Stewart Enterprises has compiled an impressive portfolio of high quality funeral homes and cemeteries across North America,” Tom Ryan, Service Corp.’s chief executive officer, said in the statement.
Stewart Enterprises rose 33 percent to $12.97 at the close in New York. The shares had advanced 27 percent this year before today. Service Corp., based in Houston, gained 4.7 percent to $18.44.
Service Corp. owned and operated 1,437 funeral homes and 374 cemeteries in 43 states as of March 31, according to the statement. Service Corp. anticipates completing the transaction late this year or early in 2014, pending antitrust and shareholder approval, according to the statement.
JPMorgan Chase & Co. is providing financing and advice to Service Corp. on the transaction. Shearman & Sterling LLP is the company’s legal adviser.