Service Corp to buy Stewart for more than $1B
HOUSTON -- Service Corp. International plans to buy Stewart Enterprises Inc. in a cash deal valued at about $1.13 billion that combines the two largest funeral home and cemetery operators in the United States.
Houston-based Service Corp. said Wednesday it will pay $13.25 for each share of Stewart, which is based in Jefferson, La. That's a 36 percent premium over Stewart's closing price on Tuesday.
Stewart has about 85.4 million shares outstanding, according to FactSet.
Service Corp. said the combined company will operate 1,653 funeral homes and 515 cemeteries in the United States, Canada and Puerto Rico.
The boards of directors for both companies have approved the deal, which adds up to $1.4 billion when counting Stewart's debt, but Stewart shareholders still need to vote on it. The companies expect to close it by the end of the year or in early 2014.
Service Corp. said the combination will generate about $60 million in annual savings, which will be fully realized over a two year period after the deal closes. Savings will come from reduced expenses, the elimination of a duplicate public company and increased purchasing power.
Service Corp. will use cash on hand and financing from JPMorgan Chase Bank to complete the deal.
Shares of Stewart Enterprises jumped 34 percent, or $3.31, to $13.05 Wednesday before markets opened and after the companies announced the deal. Service Corp., meanwhile, climbed 3.5 percent, or 61 cents, to $18.23.
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