Why Mister Car Wash Stock Surged This Morning
Key Points
Mister Car Wash has agreed to be taken private for $7 per share.
The company will be acquired by a private-equity firm that has backed it for several years.
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Shares of car-wash operator Mister Car Wash (NASDAQ: MCW) were sharply higher on Wednesday morning following its earnings report -- and on news that the company has struck a deal to go private for $7.00 per share.
As of 11:00 a.m. ET, shares were up about 16.4% to $6.99.
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A surprise deal to go private sent the stock surging
In an early morning statement, Mister Car Wash said it has entered into a "definitive merger agreement" with private equity firm Leonard Green & Partners (LGP). LGP currently owns about two-thirds of the car-wash giant.
Mister Car Wash, which operates over 500 locations, said that it has agreed to be taken private. Image source: Mister Car Wash.
Under the deal, LGP will purchase the remaining shares of Mister Car Wash for $7.00 per share, a price that represents a 29% premium to the volume-weighted average price of the company's stock in the preceding 90 days.
The price implies an enterprise value of $3.1 billion for the company. The transaction is expected to close by the end of June.
About those fourth-quarter earnings
Separately, Mister Car Wash announced its fourth-quarter results on Wednesday morning. Adjusted earnings per share of 11 cents were slightly ahead of Wall Street's expectations. Revenue was up 4% year over year to $261.2 million, as the company added 16 new locations during the period. Net income was $20.1 million.
All in all, a decent quarter that probably would have nudged shares moderately higher. But the deal to go private made the results mostly irrelevant.
Given that LGP already owns 67% of Mister Car Wash, I don't see a competitive bid emerging. Still, if you own the stock, there's probably no harm in waiting a bit.
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John Rosevear has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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