Corporate News Blog - Aramark Announces Two Billion Dollar Acquisitions

LONDON, UK / ACCESSWIRE / October 18, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Aramark (NYSE: ARMK), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=ARMK. The Company announced on October 16, 2017, that it signed definitive agreement to acquire Avendra, LLC and AmeriPride for a combine total of $2.35 billion. The food services Company expressed confidence that these two leading companies will significantly improve how Aramark services its customers and will deliver growth and strengthen the Company's competitive position across its portfolio of food, facilities, and uniforms businesses. For immediate access to our complimentary reports, including today's coverage, register for free now at:

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Eric J. Foss, Aramark's Chairman, President and CEO commented on the deal: "We have been executing successfully against our clear and focused strategy and have substantially elevated our operating performance and financial flexibility. These strategic and financially compelling transactions represent the next step in our commitment to drive sustainable shareholder value."

Avendra - The Leading Hospitality Procurement Services Company

Aramark stated that it will acquire Avendra for a purchase price of $1.35 billion, or a net purchase price of $1.05 billion, post adjustment for the value of the anticipated tax benefits. Avendra, which is majority owned by Marriott International, Inc. (NASDAQ: MAR), is a prominent hospitality procurement services provider in North America, managing nearly $5 billion in annual purchasing spend for over 650 companies at more than 8,500 locations, including over half of the Top 30 hotel chains.

In a separate press release, Avendra announced that post redemption of management participation rights, transaction costs, and repayment of Avendra's outstanding debt, the Company's founding shareholders, Marriott, Hyatt Hotels Corporation (NYSE: H), Accor, ClubCorp and IHG, are expected to receive approximately $1.18 billion in cash proceeds from the transaction. Marriott expects to receive approximately $650 million for its 55% interest in Avendra.

Aramark noted that combining Avendra's dominant procurement capabilities with Aramark's supply chain management expertise will bring increased buying scale and improved service levels to both Avendra's and Aramark's customers while strengthening their industry reach and competitive positioning. The merger also creates opportunities for Aramark and Avendra to grow their customer base outside of their traditional industries. Furthermore, Aramark anticipates generating procurement cost synergies of approximately $40 million on annual basis, which the Company is estimating to be fully realized by the third fiscal year post closure of the transaction.

AmeriPride: A Leading Uniform and Linen Rental and Supply Company

Aramark also announced that it has signed a definitive agreement to acquire AmeriPride for a purchase price of $1.0 billion or a net purchase price of $850 million after adjusting for the value of the anticipated tax benefits. AmeriPride is a leading uniform and linen rental and supply company in the US and Canada, with annual revenue of approximately $600 million.

Aramark stated that the combination of these two uniform services companies will create a leading uniform services provider with enhanced scale and capabilities, serving nearly 500,000 customers. The transaction will bolster Aramark's competitive position in the US, and immediately establish a strong position in Canada. Moreover, Aramark anticipates annual cost synergies of approximately $70 million, which it expects will be fully realized by the fourth fiscal year, post-closure of the transaction.

Transaction Details

Aramark stated that its Board of Directors has unanimously approved both transactions. The transactions were also unanimously approved by the Board of Managers of Avendra and Board of Directors of AmeriPride, respectively. Aramark expects the transactions to be completed by the end of the calendar year 2017, subject to customary closing conditions and regulatory approvals.

Aramark plans to issue new debt in order to finance these transactions, for which the Company has already received fully committed financing.

Last Close Stock Review

Aramark's share price finished yesterday's trading session at $42.97, climbing 1.03%. A total volume of 1.53 million shares have exchanged hands, which was higher than the 3-month average volume of 1.10 million shares. The Company's stock price surged 5.53% in the last three months, 18.47% in the past six months, and 16.29% in the previous twelve months. Additionally, the stock rallied 20.30% since the start of the year. Shares of the Company have a PE ratio of 31.41 and have a dividend yield of 0.95%. The stock currently has a market cap of $10.49 billion.

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