Omni Services, Incorporated (a)

Abstract

This case calls for the valuation of a small, closely held U.S. firm for potential sale to a French firm.

Excerpt

UVA-F-0438

OMNI SERVICES, INCORPORATED (A)

This was not the first time someone had shown an interest in buying Omni Services, Inc., a rental linen service headquartered in Culpeper, Virginia. In 1975, a Minnesota firm offered to buy the Omni stock and pay for it with notes, but Omni's major shareholders objected to holding notes of the other company. Since then, other offers had also been rejected. Each time, the major shareholders had expressed concern over the strength of the potential purchaser or the terms of the offer: those making the offers were either too small, had too much debt, or were in a different line of business. But now, the interest of the owner of The Société Générale de Location et Services Textiles (Textiles), a large, strong French firm that was also in the rental linen business, seemed more promising. After a brief initial meeting, Omni's founder and president, N. B. Martin, and Textiles' owner, Jean Leducq, had started getting to know each other and each other's business. Jean Leducq had sent Textiles representatives to visit several of Omni's plants; and Martin, while vacationing in France, had stopped to look at some of Textiles' operations. During that visit, Martin and Leducq had discussed a number of things quite openly, but price was not one of them. Leducq was considering buying a majority interest in Omni with his eventual ownership position reaching two-thirds or better.

Although there had been considerable correspondence and many visits by Textiles employees, Leducq himself had never visited Omni's headquarters. Now he was coming for a short visit in mid April to meet the Omni management and visit the Culpeper plant. Knowing that Leducq had engaged a New York firm to value Omni's closely held stock, Martin was sure that Leducq was serious about his proposal. In preparation for this visit by Leducq, Martin asked Omni's comptroller, Larry Thomson, to determine a fair price for a majority of Omni's stock and to consider a method that could be used now to place a price on the remaining shares for sale in 1985.

Omni Services, Inc.

Omni Services, Inc., was a holding company for the 12 companies listed in Exhibit 1. Each of the subsidiaries was called Rental Uniform Services and was located in the Eastern United States.

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Keywords: acquisitions, international case, diversity case, valuation, international