(News Bulletin 247) – The industrial laundry group jumped on the Paris Stock Exchange after announcing that it had ended its discussions with Vestis and Unifirst with a view to a potential merger. Which relieves investors.

Elis throws in the towel. The industrial laundry specialist announced this Friday afternoon that it had ended its discussions with the American company Vestis with a view to a potential merger.

The group indicated that it had done the same with Unifirst, another American group specializing in uniform rental and maintenance. Thursday evening, Bloomberg reported that Elis approached this company, whose market capitalization exceeds $3.5 billion.

“These two discussions were terminated, neither of which allowed Elis to carry out a transaction in accordance with its strict financial discipline,” explains the French group, which adds that it remains “focused on its strategy combining organic growth and acquisitions that create value”.

On the Paris Stock Exchange, the market welcomes, with undisguised enthusiasm, the abandonment of these potential merger projects. Elis shares rose by 12% to 20.40 euros, whereas they were down slightly by 0.3% before this announcement, broadcast at 3:00 p.m.

An acquisition too big for the market

At the beginning of September, Elis confirmed having approached Vestis, a former subsidiary of Aramark specializing in the rental of work clothes.

The stock market had reacted badly to Elis’s expressions of interest in this American company, fearing that this potential acquisition would be too big for the French group. Elis shares plunged 15.7% on September 6. The market then feared that Elis would have to resort to an ultra-dilutive capital increase for shareholders.

At the time of the announcement, the American group weighed 2 billion dollars (compared to 4.6 billion euros for Elis) on the stock market and 3.3 billion dollars including debt, according to Reuters.

“The problem is that it is a very big acquisition for Elis, that there will be no synergies since the company is based in the United States where Elis is not present, and that this contradicts the discourse previously held that there were no big ‘deals’ in sight and that the company wanted to get out of debt,” explained an analyst based in Paris.