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Cintas Corp. Up in After-Hours Trading

cintasBefore the closing bell in today’s trading, Cintas Corp. (NASDAQ: CTAS) was down 0.48% at $65.95 per share but in after-hour trading, the stock topped Wall Street expectations,  and traded at $66.65 per share, up a total of 1.06%. Over the past 52 weeks, trading ranged between $49.77 and $67.59.

According to analysts, there were two reasons for the late boost to Cintas Corp. stock. First, this work uniform apparel company reported better-than-expected results in fiscal first quarter earnings. Profits reached $0.93 per share, a full $0.20 more than anticipated. In line with the consensus estimate, revenue for the period was $1.1 billion. Included in the results was a gain of $0.15 per share on sales of equity method investment stock.

The second reason is the transaction with Shred-It International, which specializes in secure on-site shredding of documents and non-paper items to include CD-ROMs and video cassettes. There are approximately 140 Shred-It branches throughout North America and in addition to the shredding service it has a records management business in Canada.

The agreement with Shred-It was first announced in March 2014, which involves the shredding businesses of Cintas Corp and Shred-It International being combined. According to the agreement of this newly formed partnership, shareholders of Cintas will own 42% while shareholders of Shred-It will own 58%. The entity will operate under the Shred-It brand, with annual revenues expected to be in excess of $600 million.

Along with Cintas owning 48% of the partnership, it will receive roughly $180 million in cash when the transaction is finalized. As stated by Scott D. Farmer, CEO of Cintas Corp, the two companies combined will become an industry leader that benefits from increased resources and scale, but also hearty cash flow.

Cintas Corp., an Ohio-based company, provides extremely specialized services to various types of businesses in the United States and Canada. Cintas not only designs but also manufactures and implements corporate identity uniform programs, restroom supplies, entrance mats, first-aid, fire, and safety protection products, and document management services. Currently, about one million businesses are serviced by Cintas Corp.

While Cintas Corp. is a publicly held company that trades over the Nasdaq Global Select Market, Shred-It International is a private company. Shred-It is a world leader in document security and operates in 17 countries with more than 180,000 local, national, and global businesses as clients to include hospitals, universities, banks, and law enforcement agencies.

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