Park Lawn Corporation makes offer to acquire Carriage Services

 

 

 

The world of Death Care has once again proved pretty small.  In what was supposed to be a confidential offer, Park Lawn Corporation has confirmed, according to this Yahoo Finance article, that they have recently made a buy-out proposal to Carriage Services.

 

And, Carriage Services, in this company press release, has stated that they have announced a “Review of Strategic alternatives” for their company.

 

What we know from a June 13, 2023, letter addressed to the Board of Directors at Carriage Services from Park Lawn Corporation CEO J. Bradley Green is that Park Lawn Corporation and private equity partner Brookfield Asset Management has offered to acquire all of the outstanding equity of Carriage Services for a price of $34 per share in cash.

 

In that letter, Brookfield Asset Management is described as a company with $825 billion of assets under management.  The letter further states that Brookfield has over 100 offices on five different continents and employs upwards of 200,000 employees.

 

Funeral Director Daily take:  One had to see this coming.  These companies are about equal in size with Seeking Alpha listing the 2022 Revenue for Park Lawn Corporation as $311 million and the 2022 Revenue for Carriage Services as $343 million.

 

In addition, Carriage Services, according to their latest press release, operates 170 funeral homes and 30 cemeteries.  Park Lawn Corporation, according to their website as of yesterday, operates 175 funeral homes and 144 cemeteries.

 

Furthermore, the top management at Park Lawn Corporation, CEO J. Bradley Green and President/COO Jay Dodds, were former employees at the Carriage Services corporate office so they not only know their company, Park Lawn Corporation, they also have some insight into the operations of Carriage Services.

 

I’ve said before, as I recently did in the InvoCare/TPG Capital takeover situation in the South Pacific, once a company gets in play, as Carriage Services is now, some type of transaction generally occurs.  That transaction may not be with the original suitor or it may not be for the price originally offered, but it just seems to me that appearing to be on the “sales block”, whether self-directed or directed from a takeover attempt, seems to take a lot of the wind out of the sails of the pursued company.

 

We will see what happens in this case.  While the $34 per share offer by Park Lawn Corporation is a 25% increase over where the Carriage Services stock has been at lately, Carriage Services stock was as high as $60 per share in 2021.  Depending on what price stockholders bought their positions of stock, I’m not so sure that those who bought in at over $34 per share would be willing to take this offer.  They may look for a higher price.

 

If Park Lawn Corporation is successful with this bid, the combined company would have somewhere between $650-700 million in revenue and operate almost 300 funeral homes and about 175 cemeteries.  That would be a big company, but in comparison to Service Corporation International (SCI), who Seeking Alpha lists as taking in over $3.8 billion in 2022 Revenue, the combined company would still be less than 1/5 the size of SCI.

 

You never know, putting Carriage Services in play might even move SCI, or another company inside or outside of funeral service, into the process of looking to add the company to their business.  If SCI would kick the tires of Carriage Services it would probably trigger Federal Trade Commission hearings on monopoly power, but it is not an unthinkable situation.

 

It might be an interesting couple of weeks as this scenario plays out.

 

Related —  Carriage Services gains after Park Lawn takeover offer, strategic reviewSeeking Alpha, June 29, 2023

 

Disclaimer — The author of this article holds stock positions in Park Lawn Corporation, Carriage Services, and Service Corporation International.

 

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1 Comment

  1. Bill on June 30, 2023 at 12:48 am

    Here’s the thing, Carriage is drowning in debt and they aren’t ever getting out of it. no matter how many points they add on margin. Currently, their interest rates are low but, will skyrocket in the near future. Yet, they STILL keep buying homes?! Madness. Their best bet is to sell PLC 30-40% of their locations. Get the debt down and re-focus in a few years. Payne made some really bad decisions in the last few years and the company/shareholders are paying for it. Listening to him talk was painful, like he invented the industry. No one is to blame but him. Honestly, I’m not even sure why PLC wants them. I’d wait for bankruptcy in a few years and pick up assets at 30c on the $1. They have some great locations but, they also own a bunch of dumps. That means CAPEX cost to fix. Good luck PLC.



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