Central Parking says goodbye to stock exchange

Trio of private equity firms to pay $725 million for parking lot operator

Email | Print By Walker Duncan and E. Thomas Wood

Central Parking's global success generated the funds that founder Monroe Carell donated for Vanderbilt's Monroe Carell Jr. Children's Hospital

Chalk up another.

In a move that has not been entirely unexpected, Central Parking Corp. announced today that it has agreed to be acquired by a consortium of private equity firms.

The latest in an ever-lengthening line of local companies to bid ‘adieu’ to public trading, Central Parking will join iPayment, Thomas Nelson, and HCA in the ranks of Nashville companies who have gone private in the last year. Also likely to be joining that club soon is Direct General, which announced its plans to go private at the end of last year.

Should the deal close, Central Parking shareholders will receive $22.53 in cash for each of their shares. According to the statement released by the company this morning, that figure represents a 30.8 percent over the stocks closing price on Nov. 27, the day before the company announced that it had retained the Blackstone Group as a financial advisor.

The company, once quite the high-flyer among Nashville’s public companies and still the global leader in the parking-lot business, has struggled with decreasing profitability in recent years. Consequently, this is not the first time such a move has been considered.

In 2005, Central Parking retained Morgan Stanley as an advisor essentially looking to sell. In the end, that search yielded no buyer. Instead, the company sought to streamline operations and shuffle management with Emmanuel Eads replacing Monroe Carell as CEO.

Carell, who founded the company in 1967 after taking over a small group of local lots assembled by his father, will, along with his family, see a payday of approximately $350 million from this deal. Family members collectively own nearly half the company.

That estimate includes roughly $6 million in lump-sum payments that Carell's employment contract calls for in the event of a change of control at the company. $350 mil beats no mil at all, but everything in life is relative. In 1997, with assets estimated at $600 million, Carell made it into the "Forbes 400" list. Today, nobody gets into that club with less than a billion dollars.

In 2000, after lengthy negotiations, Central Parking reached a settlement with federal antitrust authorities so it could buy its closest competitor, Allright Corp. of Houston. "Joel Klein, who also beat the hell out of Microsoft, was the person on our case," Carell recalled in an interview that year. "We probably were fortunate to get out with what we did."

Although the Allright deal did finally go through, it never produced the growth that Central had hoped for, and Central Parking encountered various misfortunes in the ensuing years, including a 2005 accounting scandal at a UK affiliate that cost the company more than $12 million. After operating more than 4,000 parking facilities in 2000, the company is down to about 3,100 today, spread throughout North America, Europe and Latin America.

It's worth noting that some of the depletion of Carell's net worth over the years has happened by design, for philanthropic purposes. Since the mid-1990s, the Carell family has provided major funding for the new Monroe Carell Jr. Children's Hospital at Vanderbilt, a $5 million library for Harpeth Hall School, several full-tuition scholarships for Vanderbilt students working their way through college, the Pope John Paul II High School in Hendersonville, the Nashville Symphony's various endeavors, and a permanent outdoor sculpture installation at Cheekwood.

The buyer group in the deal announced today, operating under the name KCPC Holdings, is made up of Kohlberg & Co., Lubert-Adler and Chrysalis Capital Partners. Together, the group has received equity and debt financing commitments of roughly $903 million. In terms of the per-share price tag, Central Parking is valued at approximately $725 million.

The deal is expected to close in the second calendar quarter of ’07. Since every one of the going-private transactions involving local companies mentioned above was attended by lawsuits from shareholders wanting a higher price or claiming that insiders were profiteering at their expense, it's more than likely that one or more writs will hit the counter at a Nashville court clerk's office in the very near future.