Last Monday, June 3, Park Lawn Corporation (PLC) made an announcement through this press release that they had an agreement to be acquired by Viridian Acquisition Inc., a company formed with assets of Homesteaders Life Company and Birch Hill Equity Partners.  The announcement stated that Viridian would “purchase all of the issued and outstanding shares of Park Lawn for a share price of CAN $ 26.50 per share”.  The announcement further stated that totaled a value of about CAN $ 1.2 billion.

 

In US dollars that would equal about US$ 871 million.  (Since the rest of this article will deal with Park Lawn financials given out in U.S. dollar denominations, all figures through the rest of this article will be in United States denominations and amounts.)

 

As I’ve said before when these types of transactions are announced, sometimes they come as a real surprise as other possible suitors for the company had never thought of making an offer because they didn’t know it was for sale.  However, between now and the stockholder vote on July 29 I’m of the assumption that another offer for the company could be made.

 

Here are some simple thoughts that I have on this proposed transaction:

 

• The rather rapid approaching voting date and the fact that there is a US $20.3 million “termination fee” payable by Park Lawn (to the new acquisition company) if it accepts a superior proposal indicates to me that the Park Lawn Corporation Board and mangement seems to want to do this transaction as it sits.

 

• The only financials some of us have is the 2024 1st Quarter report by PLC.  I say that because that report is the only financial numbers available publicly to us that reflect the company’s operation after the disposition of the 83 business units that were sold to Everstory Partners in the 4th Quarter of 2023.

 

• Those 1Q24 numbers show a quarterly adjusted EBITDA of US$19.6 million and multipled to reflect a full-year of operation would indicate an adjusted EBITDA of about US$ 78.5 million.  That would make the purchase price of US$ 871 million about an 11 times adjusted EBITDA purchase.

 

• The 1Q24 numbers of PLC also show that funeral home revenue was US$ 52.9 million which annualized would be US$ 211.9 million.  According to the PLC website they operate 175 funeral homes so that would equate to each funeral home having an annual revenue of about US$ 1.21 million.

 

• According to their latest annual report Park Lawn Corporation had US$ 31.7 million in “Corporate General and Administrative” expenses for 2023.

 

• By my thinking, funeral homes with a revenue of about US$ 1.21 million are in a “sweet spot” for many regional operators and certainly could be divested fairly simply, and probably quite profitable should another suitor be required to divest for competitive balance sake.

 

• Also, the almost US$ 32 million in corporate expense is a target other operators, already with corporate expenses, could look at as a way to improve PLC’s adjusted EBITDA if acquired by an existing company.

 

So, who else might be interested in the acquisition of Park Lawn Corporation?  I’ll bring you my thoughts on that in a subsequent article.  However, if there is somebody else interested I don’t think it will be too long before we hear about it because of the July 29 stockholder voting date.

 

More news from the world of Death Care:

• Grieving son wants driver held accountable who interrupted his father’s funeral procession.  Video news story and print article.  Channel 13 ABC -TV — Grand Rapids (MI)
• New legislation explores human composting.  WRAM Radio – Monmouth (IL)
• All funeral homes face spot checks after after concern over mistreatment of the dead.  The Telegraph  (United Kingdom)
• Funeral directors expelled after missing ashes probe.  BBC Scotland (United Kingdom)

 

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