Aramark announces major acquisitions worth $2 billion-plus
Aramark Corp., in a deviation from its history of relatively small acquisitions in recent decades, said Monday that it will spend $2.35 billion to buy two separate companies, one that manages $5 billion in purchasing for major hotel chains and a second that will expand Aramark’s uniform-rental and linen-supply business in the United States and Canada.
The net cost of the deals, after tax benefits, is expected to be $1.9 billion. Philadelphia-based Aramark said it will issue new debt to pay for the acquisitions.
One of the firms to be acquired, Avendra LLC, is based in Rockville, Md., and manages purchases for 650 hospitality firms at more than 8,500 locations. Avendra — with a purchase price of $1.35 billion, brought down to $1.05 billion after anticipated tax benefits — complements Aramark’s 2016 purchase of HPSI, a group-purchasing firm for the health-care, hospitality, and higher-education sectors.
The second deal, for AmeriPride Services Inc., based in Minnetonka, Minn., and with annual revenue of about $600 million, will significantly increase the size of Aramark’s uniform business. That unit had $1.56 billion in revenue in the year ended Sept. 30., 2016. The AmeriPride purchase price is $1 billion, with the net after tax benefits expected to be $850 million.
“Today is an historic day at Aramark as we announce we will join forces with two leading companies that will significantly improve how we service our customers, while expanding our capabilities and scope in critical areas of our business,” Eric J. Foss, Aramark’s chairman and chief executive said in a news release.
In early trading on the New York Stock Exchange, Aramark’s shares were up 36 cents, or less than 1 percent, to $42.69.