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Mace looks to unload carwash division

October 11, 2010
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On December 9, 2004, Mace Securities International, Inc., Mount Laurel, NJ, announced that it was working with investment banking firm Legg Mason to explore the possible sale of its car and truck wash division.

Mace, the second largest carwash operator in the country, has made public a decision that has been speculated by industry veterans for some time: the company is pulling its weight out of the carwash industry to focus its entire effort on the securities division.

In spite of this pronouncement, Mace’s Director of Investor Relations, Eduardo Nieves Jr. told Professional Carwashing & Detailing magazine that the company has absolutely no regrets when it comes to its handlings with and time devoted to its carwash division.

Not altogether unexpected
For a company that spent the better part of the past few years trying to rebuild its stock price — an initiative that included the purchase of $500,000 worth of its own stock in mid-2000 — Mace’s recent financial reports were significantly improved.

The company’s stock price has risen from its prior fluctuations around the $1 mark to just over $5 — an increase that comes just three years after the Nasdaq threatened to de-list the publicly traded company if they didn’t raise their stock price above $1 for 30 consecutive days.

Then, the 2004 acquisition of two electronic surveillance divisions of American Building Control, Inc. (SecurityandMore and Industrial Vision Source) only produced more speculation about Mace’s intentions towards its carwash division’s future — its growth seemed to be stagnant, while the security division was prospering.

Incredible third quarter results in 2004 for Mace’s electronic surveillance division solidified these feelings — there was a growth of over 600 percent from the previous year.

And the less-than-stellar numbers for its carwash division (a $1.7 million reported loss) made the possibility that Mace was pulling out of carwashing seem almost unavoidable.

Will one entity make the purchase?
Mace had, at one point — when it was a potential carwash consolidator and was growing its wash division exponentially — owned and operated 62 carwashes in the US. An unsuccessful merger with Wash Depot Holdings would have risen that amount to 134 locations in 18 states.

But in October of 2000, Professional Car Care Online reported that the deal fell through and talk of a merger seemed to dissipate as Mace stock price fell and Wash Depot filed for bankruptcy protection.

Currently, however, there are 49 carwashes and five truck washes under the Mace umbrella that reside in Arizona, Delaware, Florida, New Jersey, Pennsylvania, Indiana, Ohio and Texas.

Is it feasible to think that there is just one company out there that will purchase all 54 locations from Mace, or will these locations have to be sold piecemeal?

Nieves said that Mace is not sure which direction this sale will go but that’s why it hired Legg Mason.

"As far as who could be the buyers, at this point we don’t know," Nieves said. When asked if Mace would consider breaking the division into parts for sale Nieves said that option had not been considered.

According to the company press release dated December 9, the only sale that will be considered by Mace will have to contain a purchase price that would be sufficient enough to retire all debt related to the car and truck washes and provide capital for the growth of Mace’s security divisions.

A recognized security name
Mace knows it is a recognized name in security and, when the public speaks about this company, it’s not often the carwash affiliation that comes to mind.

Nieves said that since 9-11 security has become a huge concern in this country and, with such a recognizable name, Mace decided that investors will look to companies that have a lot of future growth potential and security is a business that is going to have future growth.

That mindset, according to Nieves, has brought a lot of people to the table to look at what Mace has to offer. Mace’s strong security name has provoked a lot of interest in that sector.

According to the company release, there is still no set decision as to the fate of the carwash division.

"There can be no assurances that any particular strategic business alternative will be pursued or that any transaction will occur, or on what terms," the release stated.

Nieves assured PC&D that, though the company is focusing its growth potential in the security segment, the carwash division will not simply be discarded.

This transaction has a definite protocol and Mace wants to be sure that this possible acquisition, though it is still only in its inaugural phase, will cause the carwash division to experience minimal upset.

Any regrets?
Nieves said that the fundamentals of the carwash business are solid, and though it’s a very challenging business and the weather definitely affects a lot of what you can and cannot do, Mace has enjoyed the carwash industry.

"But, as a company, we are (simply) looking to grow in our security sector," Nieves said.

"All we have done is hire a firm to look at the possibility of a sale," he added. "We are still operating the business as we were two weeks ago and we will do so until further notice or until a possible sale occurs."

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