Elis Is Said to Make Rebuffed Bid for UniFirst Amid Vestis Talks

(Bloomberg) — Elis SA, the Paris-listed provider of uniform and linen cleaning services, made an informal takeover proposal to US peer UniFirst Corp., according to people familiar with the matter, the second move by the French company to pursue an American acquisition.
Massachusetts-based UniFirst reached out to Elis to gauge its appetite for a deal after Elis’s takeover approach to rival Vestis Corp. became public last month, said the people, who asked not to be identified because discussions are private. 
The French company made a non-binding proposal for UniFirst, whose board rejected it in recent days, and the companies aren’t currently in talks, the people said. It remains to be seen whether the interest in UniFirst, which is valued at $3.7 billion, will be revised, they said.
At the same time, Elis and Vestis are still holding exploratory talks about a potential deal, the people said. The two companies confirmed the interest about a month ago after Reuters first reported the approach. Elis shares plunged 16% on Sept. 6 after a possible deal became public. The French company now has a market capitalization of €4.4 billion ($4.9 billion).
Since then, Vestis has attracted interest from other parties including private equity firms, the people said. The company, which has a market capitalization of $1.9 billion, is working with advisers to assess the situation, they said. Options include staying independent and a sale. Deliberations are early stage and talks with Elis and other parties may not lead to a transaction.
Representatives for Elis, UniFirst and Vestis declined to comment.
Any deal would add to a flurry of French M&A appetite to expand in the US. Paris-listed catering firm Sodexo SA has been exploring a potential acquisition of US rival Aramark as it seeks growth overseas, people familiar with the matter said last month. French dairy companies Groupe Lactalis and Sodiaal agreed to buy General Mills Inc.’s North American yogurt business for $2.1 billion last month.
Elis Chief Executive Officer Xavier Martire, who is hunting for American deals, made the move for Vestis after the US firm cut its fiscal-year revenue growth and profitability guidance in May, sending its shares to a record 45% plunge in a single day. 
Elis said at the time that any deal would have to meet its commitments to shareholders. Those include maintaining an investment-grade credit rating and making sure the purchase adds to earnings per share in the first year.
UniFirst shares have gained 8% this year. The founding Croatti family controls more than 70% of the combined voting power of its two classes of stock, according to the company’s annual report. UniFirst was started in 1936 when Aldo Croatti founded a laundry business to clean factory workers’ clothes, which eventually turned into a leading uniform rental service. The company serves more than 300,000 customers and outfits over 2 million workers across industries including automotive, transportation warehousing and construction.
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