Month: March 2025

Cintas abandons pursuit of UniFirst

Tactic of pursuing hostile takeover fails

As a follow up to the article “Cintas and UniFirst’s Visions aren’t Uniform,” the Cincinnati Business Courier reported Cintas has dropped its bid for UniFirst.

In my opinion growth can be pursued by other means than acquisition. I heard this proposed acquisition referred to as a “hostile takeover,” which indeed it may have. These takeovers were often pursued years ago, made popular in the film, “Wall Street”. They do more harm than good.

Further articles will pursue this idea of growth and options available that companies can use to pursue it. Once again, the end doesn’t justify the means here.

Google’s Buy of Wiz May Not Be a Whiz-Bang

Past anti-trust pursuits may stall or stop this buy from going through

Google announced on March 18, 2025 a $36B (B as in billion) acquisition of Wiz.  They are a relatively new startup involved with cybersecurity. 

Google is technically a subsidiary of Alphabet, the parent company that owns Google and all the other acquisitions.

This would be Alphabet’s largest payout for an acquisition. 

This acquisition was attempted just last year in July.  Wiz declined the then offer of $23 billion, saying they wanted to pursue an initial public offering. 

This acquisition plans to undergo federal anti-trust scrutiny.  A major reason is that over the years Google has acquired a boatload of companies.  According to Wikipedia, the total is a staggering 261!  Some of those bought are You Tube, Fitbit, Android, reCAPTCHA, Invite Media, Skybox Imaging, Dropcam.  Google is technically considered one of the acquisitions, thus under Alphabet. The question here is, does a company with over 250 acquisitions qualify as a monopoly?

Alphabet has a history of anti-trust pursuits, and not all by the U.S. government.  Most of these have been over Google’s perceived monopoly over the search engine market, including entering into exclusive agreements with device manufacturers to provide its browser.  A separate lawsuit focuses on its digital advertising platform.  Not only by the U.S. federal government but also European governments as well.  My argument is whether Google has created a monopoly based solely on its acquisitions. 

ANALYSIS

What’s wrong here?  How can you avoid being slapped with the name of oligarch if you have over 250 acquisitions?  How can you avoid this scene being labeled as a monopoly?  Does your company have over 100 acquisitions, let alone 250?  Is acquisition the only way for Google to “grow?” 

If Google needs improvement with cybersecurity, can’t they develop their own?  Or they could form a partnership.  Or they could simply purchase the service as a customer.  These other companies could still exist as independent entities.  Why does Wiz and hundreds of others have to be “acquired”. Alphabet may have legitimate evidence to justify it.  However, theirs is not the only valid point of view here.  It then becomes determining which valid argument takes priority.

POSSIBLE SOLUTIONS

  • Have Alphabet pay an annual acquisition tax for every acquisition they have made.  The idea here is not to slap a tax on simply being large but on specific behavior. 
  • Have the courts break up Alphabet from its acquisitions, leaving what it may have developed itself.
  • Provide “incentives” for Google and the other Big Tech companies to divest their acquisitions on their own.  Divestiture is something recently pursued by both General Electric and Honeywell.
  • If the courts rule that Google is not a monopoly, laws need to be rewritten so the courts can rule based on specific statutes and not on wide interpretation.

This proposed acquisition will be interesting to follow in the coming months. Future articles here will explore further the idea of defining “growth” as well as this pursuit of divestiture.

Cintas and UniFirst Visions aren’t Uniform

This is a classic example of what’s wrong with mergers and acquisitions today. 

Cintas Uniforms Truck

On January 7, 2025, Cintas Corp. announced a $5.3 Billion offer to purchase rival UniFirst.  Both companies’ core business is corporate uniforms.  Cintas is headquartered in Mason, OH, over 20 miles north of Cincinnati.  UniFirst is in Wilmington, Massachusetts. 

This proposed acquisition has an interesting history.  Cintas proposed acquiring UniFirst in February 2022, but the offer was rejected.  Management has now rejected this second offer.

Steve Watkins of the Cincinnati Business Courier quotes Cintas CEO Todd Schneider saying:

 “We call on the UniFirst board, its controlling shareholders and management team to immediately engage with us to reach a mutually acceptable definitive agreement that delivers the full value of this combination for shareholders and other stakeholders…We firmly believe in the compelling strategic fit between our two companies, and our offer would deliver immediate and compelling value to UniFirst shareholders…The combination would also amplify the benefits of Cintas and UniFirst’s ongoing technology investments to drive growth and benefit our collective customers and employee-partners.”

UniFirst issued a response, saying:

“The board conducted a careful review of the unsolicited proposal and determined that it is not in the best interests of UniFirst, its shareholders and other stakeholders,” adding the decision was made based on the offer price, business risks and feedback from its largest shareholders.

Cintas

Cintas is 3½ times larger, with $9.6 Billion in revenue, versus $2.7 Billion for UniFirst.  UniFirst has an interesting strategy, though, to fight back.

UniFirst posts on its website suggestions directed at customers of companies acquired by Cintas to consider switching to them.  And there is more than one company listed.  How about that!

Resistance Strategy

Cintas is not a bad company.  Watkins published an article in 2024 that highlights its positive work culture. 

Analysis

Cintas’s approach to acquiring UniFirst is a classic example of what’s wrong with mergers and acquisitions today.  It is a business chess game where the opponent is forced to play.

If someone came out of the blue to tell you what is in your best interest, would you like that?  Is this a way to win friends and influence people?  I know that many people preach about the benefit of “persistence”, but in this case “persistence” is really bullying, isn’t it?

If a company’s management is actively pursuing an acquirer, do their homework and find “the right fit”, that’s one thing.  A merger may be a better option than an acquisition, though.  In this case bullying tactics are used where the only real question the acquirer asks is “what’s in it for me?” 

Corporate Directions

Cintas’ approach to its employees is totally different to its acquisition process, isn’t it?  It is like they act as a Jekyll and Hyde company.  Do you believe companies should engage in bullying tactics with their competition?  Is this how you operate?  Does the end justify the means here?

DELAY, DENY, DEFEND…and DISCLOSE

Health Care Acquisitions contribute to the large CEO Compensation Gap

We need to further explore actions taken by United Health, and the connection between health insurers CEO compensation and their acquisitions.

Brian Thompson

Brian Thompson’s death on December 4, 2024, captured much attention, both for the murder and hateful backlash against United Health Care. 

Before proceeding, I want to say that IMO, the end does not justify the means here.  On my home page I argue it is important to focus on HOW things are done, not just on the end result.

It is important to note that Mr. Thompson was the CEO of United Health Care, but Andrew Witty is the CEO of the parent company, United Health Group.  Also, Tim Noel has recently been appointed to replace Mr. Thompson.

United Health Care

Fortune 500 magazine has United Health Care in the top 10 of 500 companies, ranked by revenue, for 2023.

ProPublica reports they have been criticized in the past for denying coverage of mental health claims.  According to the article, UHC had been using algorithms instead of reviewing all claims independently. 

United Health is not the only one to do this.  EviCore by Evernorth, owned by Cigna is the major player here, providing decision-making services to multiple health insurers based on algorithms.

CEO Compensation

Insurance Business magazine provides data on the CEO compensation by the top health insurers in the United States.  It includes CEO compensation and the ratio between that and the salary of the average employee.  Published in November 2023, it is based on statistics provided by the National Association of Insurance Commissioners.  Here are the top 5 earners:

Joseph Zubretsky           Molina HealthCare        $22.1 million    278:1

Karen Lynch                      CVS Health                       $21.3 million    380:1

David Cordani                  CIGNA HealthCare       $20.9 million    277:1

Gail Boudreaux               Elevance Health Care  $20.9 million    383:1

Andrew Witty                    United Health Group    $20.8 million    331:1

United Health Group is reported to have made 25 acquisitions, spending over $36 Billion for them.  That’s B as in Billion.  Its largest has been Change HealthCare.  Hovering over some of the other company names you will find links to their acquisitions as well.  If United Health Care had not made these acquisitions, do you think they would be as big as they are today?  Same with the others.  If they had taken that $36 billion and invested it on R&D, better coverage or on increasing employee salaries, do you think that ratio would be as big as it is? 

The Economic Policy Institute has recently released a report of CEO compensation since the 1970s.  It spiked in the 1990s when Mergers and Acquisitions began to take off beginning (but not ending) under the Clinton administration. 

What Can Be Done

I do not have the resources that institutions have to crunch the data and spit out results.  A direct relationship between acquisitions and income inequality between CEO and average employee, in my opinion, may exist.  This may “contribute” and not necessarily “cause” this inequality.  There may be other factors that contribute, such as CEO pressure on corporate boards to increase compensation.

What can be done here?  One would be for Congress to institute an annual “acquisition tax” on the top companies with the largest number of acquisitions.  Or have the Federal Government break off companies that have been acquired.  Another could be tax incentives to encourage “divestiture” or to block future acquisitions being made. Also, prohibit future acquisitions.

One thing that shouldn’t be done is for individuals to take it upon themselves to attempt to assassinate executives or to celebrate it.  As a result of this act some people lost a family member and others lost a colleague. Nothing changed for policy holders…. did it?

What Do You Think?

What do you think?  Is there a connection between acquisitions and the size of CEO compensation?  Should algorithms be the main source for accepting or rejecting claims? Do you have a problem with this? Has not only the compensation gap but the physical barriers between the decision makers and customers grown too impersonal?

AMERICA IS NO HUMPTY DUMPTY

It can be put back together again. Small businesses lead the way.

In the March 2016 edition of The Atlantic , author James Fallows wrote an article asking the question, “Can America Put Itself Back Together?”  It took him 14 pages, but his answer to his own question was an unhesitant “Yes.”

His was a journey, mostly by air, across the lower 48 to search for his answer.  He visited mostly small towns (cities that do not have major league sports teams), such as San Bernardino, CA, Duluth MN, Redlands, CA, the “Golden Triangle” of Columbus, Starkville, & West Point, MS, Holland, MI, and Sioux Falls, SD (and others.)

He reported how small businesses are providing the economic Renaissance in America.  He writes:

John Dearie, a co-author (with Courtney Geduldig) of Where The Jobs Are, argues that new business formation is the single most important guide to future employment trends.  This is because of the unlikely sounding but true economic observation that, over decades, all the net new job growth within the U.S. economy has come from firms in their first five years of existence (and mainly from fast-growing ones in their very first year).  Big established firms…employ a lot of people.  But the increase in jobs, overall, statistically comes from new firms, as they go from no employees to the first dozen or hundred.

America’s economic renaissance rests on a foundation of companies that are innovative, independent, and competitive with one another.  Taxes and regulations should allow these companies to exist and thrive and not be concerned with fighting off manipulative tactics from larger firms.

FIGHT THE POWER!

Achieving power over others through consolidation does not justify pursuing growth.

Make America Great Again…

That is a great campaign slogan, no matter what your opinion is of Donald Trump. However, he seems to define it in mainly terms of removing illegal aliens and implementing tariffs. I also would like to make America great again, but focus in a different direction

This America still exists but not in the numbers some fifty years ago. Beginning in the 1980s numerous industries began to go down the road of consolidation. For acquired private firms it often resulted in a major culture shift. For publicly traded companies, an acquisition was often sold as to what was in the best interest of shareholders. In the last 50 years many shareholders for public companies are mutual funds, pension funds, and other investment firms that have only a financial and not personal interest in the firm. This strategy has often been at the expense of employees, customers and communities. These three have also been at a similar disadvantage at some privately held companies too…. (Contd. – page link below)

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