The company will become privately held by Riverside and other stockholders; merger will allow franchises to expand brands

The Dwyer Group, parent company of Mr. Rooter, recently entered into a merger agreement with The Riverside Co., a private equity firm with offices in New York, Cleveland, Dallas and San Francisco. Under the terms of the agreement, Dwyer’s stockholders will receive $6.75 in cash for each share of common stock they own.

“Once the merger closes, the likely impact on franchisees is that we’ll be able to more rapidly expand the brands by being able to increase our investment in franchise development, Mr. Rooter included,” said Dina Dwyer-Owens, Dwyer Group’s president and chief executive officer.

Dwyer-Owens’ father took the company public in 1993 with the intention of accessing capital to provide more opportunities for the franchisees, as well as employees, she explained. But in the wake of Enron, WorldCom and ImClone, that environment has radically changed.

“It’s become harder and harder to be a publicly traded company,” she told PM. “We’re fairly small in the scheme of public companies, so (going public) just didn’t afford us the opportunities we were hoping for. We were producing the earnings results that the market kept telling us to produce, yet the stock wasn’t getting the value we would have hoped for. And it’s difficult to raise money when your stock’s not performing at the level you’d like it to. We decided to simplify and focus on growing the business.”

With Riverside as a strategic and financial partner, Dwyer now will have access to the capital it needs to take advantage of opportunities that fit company goals, Dwyer-Owens added.

The proposed merger requires the approval of those who hold the majority of outstanding shares of Dwyer common stock. Stockholder approval will be solicited by means of a proxy statement, which will be mailed to Dwyer’s stockholders after review by the U.S. Securities and Exchange Commission. A stockholders meeting to vote on the proposed merger is expected during the third or fourth quarter this year.

Upon completion of the merger, Dwyer will become privately held by Riverside and certain other stockholders, including members of the Dwyer family and senior management. Their shares will be exchanged for equity in the new parent corporation of Dwyer, although Riverside will own the majority of the company’s shares.

The Dwyer family and other members of senior management also will purchase equity in the parent company for cash. Senior management will obtain stock options in the parent company and enter into employment agreements with Dwyer.