06.29.01
The board of directors of National Service Industries (NSI) said today that The Lithonia Lighting Group and the NSI Chemicals Group, the company's largest business units, will become a new company (SpinCo), which will be formally named at a later date. The move was made to unlock value in the $2.6 billion diversified company by splitting it into two independent public companies, according to NSI.
The two remaining business units, National Linen Service (NLS) and Atlantic Envelope Company (AECO), will remain as the core businesses of a restructured NSI. James S. Balloun, NSI's chairman and chief executive officer, said, "This transaction will accelerate growth for these businesses. These are all profitable companies; however, we believe that separating them into two independent entities is in their best interests for a number of reasons.
"Through this spin-off, the two newly formed companies will be able to pursue different growth strategies that are most conducive to each company's market and operational dynamics. The Lithonia Lighting Group and the NSI Chemicals Group share commonalties that support internal growth. Both serve a North American customer base primarily in commercial, industrial, and governmental segments and have a growing retail presence. Both utilize a combination of commissioned company sales forces and independent agencies. Both have national manufacturing and logistics capabilities as well as centralized operations, lending to shared initiatives and best practices. Recently, the lighting and chemical management teams have worked together in profit improvement and growth initiatives including Six Sigma and sourcing.
"National Linen Service and Atlantic Envelope are, in separate ways, seeking to change industries in transition. These companies both serve commercial customers in smaller markets and have decentralized operations. These companies are good candidates for changing competitive positions and, at some point, acquiring larger positions in their respective industries."
Mr. Balloun continued, "In addition to grouping these businesses due to shared commonalties, there are other solid business reasons for this transaction. Each company will have a distinct capital structure, with SpinCo taking on most of NSI's existing debt. Each business will continue to pay a dividend, but the overall dividend amount will be reduced to enable each business to reinvest funds through debt reduction, strategic transactions, and/or share repurchase. Leading the way, there will be focused management teams in place at both companies to address the best ways to improve and grow these businesses.
"Through different growth strategies, distinct capital structures, and focused management teams, NSI and SpinCo will each offer a compelling value to the market, exciting revenue and profit growth opportunities, and a rewarding environment for employees. Therefore, as two separate companies, these businesses will enhance shareholder value and ensure a better future for our shareholders, customers, and employees."
Once the transaction is complete, James S. Balloun, chairman and chief executive officer of NSI, will become chairman and chief executive officer of SpinCo. Mr. Balloun joined NSI in 1996 from McKinsey & Company. Additional members of the SpinCo team will be Brock A. Hattox as executive vice president and chief financial officer; Kenyon W. Murphy as senior vice president and general counsel; Joseph G. Parham, Jr., as senior vice president, human resources; Kenneth W. Honeycutt, Jr., as president of Lithonia Lighting; John K. Morgan as president of Holophane; and James H. Heagle as president of the NSI Chemicals Group.
Robert S. Jepson, Jr., will join the company to become chairman and chief executive officer of NSI. He previously served as chairman and chief executive officer of Kuhlman Corporation. Additional members of the new NSI management team will be Vernon J. Nagel as executive vice president and chief financial officer; Richard A. Walker as executive vice president and chief administrative officer; Richard W. LeBer as president of National Linen Service; and J. Randolph Zook as president of Atlantic Envelope Company. The company does not anticipate significant job reductions related to the transaction for its 20,000 employees. Fewer than 100 corporate positions will be affected, with most personnel being offered positions at either SpinCo or NSI.
The restructured NSI, comprised of National Linen Service and Atlantic Envelope, will have combined annual revenues of over $500 million. National Linen Service is the nation's largest multi-service textile rental supplier, serving more than 50,000 customers in 22 states, utilizing a network of 40 plants and 20 service centers. The company had 2000 annual sales of over $320 million. NLS makes 110,000 deliveries weekly to customers in the dining, healthcare, lodging, casino, and commercial industries.
SpinCo, comprised of the Lithonia Lighting Group and the NSI Chemicals Group, will have combined annual revenues of over $2.0 billion. The NSI Chemicals Group will be renamed The Zep Group.
The Zep Group, comprised of Zep Manufacturing Company, Enforcer Products, and Selig Industries, provides top-quality cleaning solutions to industrial and institutional customers through the largest and best supported direct sales force in the industry. The Zep Group serves automotive, car wash, aviation, food processing, manufacturing, institutional, hospitality, home center, and retail customer segments. The company had 2000 annual sales of over $500 million.
The two remaining business units, National Linen Service (NLS) and Atlantic Envelope Company (AECO), will remain as the core businesses of a restructured NSI. James S. Balloun, NSI's chairman and chief executive officer, said, "This transaction will accelerate growth for these businesses. These are all profitable companies; however, we believe that separating them into two independent entities is in their best interests for a number of reasons.
"Through this spin-off, the two newly formed companies will be able to pursue different growth strategies that are most conducive to each company's market and operational dynamics. The Lithonia Lighting Group and the NSI Chemicals Group share commonalties that support internal growth. Both serve a North American customer base primarily in commercial, industrial, and governmental segments and have a growing retail presence. Both utilize a combination of commissioned company sales forces and independent agencies. Both have national manufacturing and logistics capabilities as well as centralized operations, lending to shared initiatives and best practices. Recently, the lighting and chemical management teams have worked together in profit improvement and growth initiatives including Six Sigma and sourcing.
"National Linen Service and Atlantic Envelope are, in separate ways, seeking to change industries in transition. These companies both serve commercial customers in smaller markets and have decentralized operations. These companies are good candidates for changing competitive positions and, at some point, acquiring larger positions in their respective industries."
Mr. Balloun continued, "In addition to grouping these businesses due to shared commonalties, there are other solid business reasons for this transaction. Each company will have a distinct capital structure, with SpinCo taking on most of NSI's existing debt. Each business will continue to pay a dividend, but the overall dividend amount will be reduced to enable each business to reinvest funds through debt reduction, strategic transactions, and/or share repurchase. Leading the way, there will be focused management teams in place at both companies to address the best ways to improve and grow these businesses.
"Through different growth strategies, distinct capital structures, and focused management teams, NSI and SpinCo will each offer a compelling value to the market, exciting revenue and profit growth opportunities, and a rewarding environment for employees. Therefore, as two separate companies, these businesses will enhance shareholder value and ensure a better future for our shareholders, customers, and employees."
Once the transaction is complete, James S. Balloun, chairman and chief executive officer of NSI, will become chairman and chief executive officer of SpinCo. Mr. Balloun joined NSI in 1996 from McKinsey & Company. Additional members of the SpinCo team will be Brock A. Hattox as executive vice president and chief financial officer; Kenyon W. Murphy as senior vice president and general counsel; Joseph G. Parham, Jr., as senior vice president, human resources; Kenneth W. Honeycutt, Jr., as president of Lithonia Lighting; John K. Morgan as president of Holophane; and James H. Heagle as president of the NSI Chemicals Group.
Robert S. Jepson, Jr., will join the company to become chairman and chief executive officer of NSI. He previously served as chairman and chief executive officer of Kuhlman Corporation. Additional members of the new NSI management team will be Vernon J. Nagel as executive vice president and chief financial officer; Richard A. Walker as executive vice president and chief administrative officer; Richard W. LeBer as president of National Linen Service; and J. Randolph Zook as president of Atlantic Envelope Company. The company does not anticipate significant job reductions related to the transaction for its 20,000 employees. Fewer than 100 corporate positions will be affected, with most personnel being offered positions at either SpinCo or NSI.
The restructured NSI, comprised of National Linen Service and Atlantic Envelope, will have combined annual revenues of over $500 million. National Linen Service is the nation's largest multi-service textile rental supplier, serving more than 50,000 customers in 22 states, utilizing a network of 40 plants and 20 service centers. The company had 2000 annual sales of over $320 million. NLS makes 110,000 deliveries weekly to customers in the dining, healthcare, lodging, casino, and commercial industries.
SpinCo, comprised of the Lithonia Lighting Group and the NSI Chemicals Group, will have combined annual revenues of over $2.0 billion. The NSI Chemicals Group will be renamed The Zep Group.
The Zep Group, comprised of Zep Manufacturing Company, Enforcer Products, and Selig Industries, provides top-quality cleaning solutions to industrial and institutional customers through the largest and best supported direct sales force in the industry. The Zep Group serves automotive, car wash, aviation, food processing, manufacturing, institutional, hospitality, home center, and retail customer segments. The company had 2000 annual sales of over $500 million.