Unifirst Tumbles After Cintas Walks Away From Proposed Deal, Retail Turns More Bearish

Unifirst (UNF) stock plunged 14.3% on Tuesday after rival Cintas (CTAS) withdrew from discussions for a proposed merger.

Cintas had offered to pay $275 for each share of uniform maker Unifirst. The offer price represented a 46% upside over Unifirst’s 90-day average closing price as of Jan. 6, the last day of trade before Cintas went public with the offer.

“While we continue to believe in the merits of a transaction, we were unable to have substantive engagement with UniFirst regarding key transaction terms. We do not believe further discussions are warranted at this time,” Cintas CEO Todd Schneider said.

The company first sent the proposal to Unifirst in November of last year, for consideration. It decided to go public with the offer after Unifirst rejected it.

Cintas also said that Unifirst’s board refused to meet to discuss any changes in valuation, following the second rejection for a deal in three years.

Unifirst said in January that it had decided not to accept the offer because it was not in the best interests of the company and its shareholders.

Following the update, UBS cut the price target for the stock to $194 from $235.

Retail sentiment about Unifirst on Stocktwits slid lower into ‘bearish’ (37/100) territory than a day ago, while retail chatter was ‘high.’

Retail sentiment about Cintas jumped higher in the ‘extremely bullish’ (93/100) territory than a day ago, while retail chatter was ‘extremely high.’

One retail trader suggested Cintas should buy another uniform seller, Vestis Corp, instead.

This year, Cintas shares have gained 5.9%, while Unifirst shares have declined by 1%.

Also See: Wynn Resorts Shares Rise After Largest Shareholder Boosts Stake: Retail Traders Excited About Company's Prospects

For updates and corrections, email newsroom[at]stocktwits[dot]com.