Service Corporation International, the country’s largest funeral services provider, said Monday it has agreed to sell off 91 properties to resolve the Federal Trade Commission’s antitrust concerns about its acquisition of Stewart Enterprises, the second-largest funeral provider.
The announcement came as SCI, the dominant player in the U.S. funeral business, said it had completed the $1.4 billion deal, which is expected to give the company roughly 15 percent of the overall market and annual revenue of nearly $3 billion.
“This is an exciting day for our company and the work we have done over the past several months positions us well to successfully integrate the two companies,” said Tom Ryan, President and Chief Executive Officer. “I would like to welcome the Stewart employees and thank the employees of both companies for their dedication and professionalism during this transition period,” continued Mr. Ryan. “Together, as we look to the future by focusing on continuous operating improvement while enhancing our customer experience and deploying capital responsibly, we believe that we can continue to create value for our customers and our shareholders.”
The acquisition was completed following SCI’s agreement with the U.S. Federal Trade Commission (the “FTC”) to the entry of a consent decree and an Order to Hold Separate and Maintain Assets which has been accepted by the FTC for public comment. The consent decree requires SCI to divest certain Stewart and SCI assets. These assets include 91 locations with 2012 EBITDA of approximately $53 million. SCI has commenced discussions with potential buyers and expects to complete all divestitures within the six month time period required by the consent decree. Buyer interest in the divestiture assets continues to be robust.
Mr. Ryan concluded,
“We are pleased to have reached a mutually satisfactory agreement with the FTC that permitted us to complete this highly beneficial transaction for SCI and its shareholders.”
The FTC said it had worked with attorneys general from several states to examine how local markets for funeral and cemetery services would be affected by the deal and had found 59 communities in which the merger was likely to “substantially lessen competition.”
Each of those markets is highly concentrated, the FTC said, and the deal “would enable the merged firm unilaterally to raise prices charged to consumers in these local markets and would substantially increase the risk of collusion between SCI and the few remaining competitors in the affected local areas.”
“We believe that, as a result of the divestitures we’re requiring the companies to make, consumers in these markets will continue to have access to competitive funeral and cemetery services,” the FTC said.
Houston-based SCI welcomed Monday’s announcement. “We are pleased to have reached a mutually satisfactory agreement with the FTC that permitted us to complete this highly beneficial transaction for SCI and its shareholders,” Tom Ryan, president and chief executive of SCI, said in a statement.
Source: Washington Post
