Aramark Announces Two Strategic And Transformative Acquisitions

PHILADELPHIA--(BUSINESS WIRE)--Aramark (NYSE:ARMK) announced today that it entered into definitive agreements to acquire two companies that will deliver growth and strengthen the company’s competitive position across its portfolio of Food, Facilities and Uniforms businesses.

“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,” said Eric J. Foss, Aramark’s Chairman, President and CEO. “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 and Avendra, LLC have entered into a definitive agreement under which Aramark will acquire Avendra for a purchase price of $1.35 billion, or a net purchase price of $1.05 billion after adjusting for the value of the anticipated tax benefits. Avendra is the leading 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. Avendra was founded in 2001 by five hospitality leaders: Marriott, Hyatt, Fairmont Hotels, ClubCorp and IHG.

“Combining Avendra’s powerful procurement capability with Aramark’s leading supply chain management expertise will bring increased buying scale and improved service levels to both Avendra’s and Aramark’s customers, while strengthening our industry reach and competitive positioning,” said Foss. “I am excited about the proven talents and deep experience the Avendra team brings to our company and look forward to welcoming them to the Aramark family.”

The merger also creates opportunities for Aramark and Avendra to grow their customer base outside of their traditional industries. Additionally, Aramark anticipates annual procurement cost synergies of approximately $40 million, which it expects will be fully realized by the third fiscal year after closing.

AmeriPride: A Leading Uniform and Linen Rental and Supply Company

Aramark and AmeriPride Services Inc. also announced today that they have entered into a definitive agreement under which Aramark will 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 U.S. and Canada, with annual revenue of approximately $600 million.

“AmeriPride is a highly-respected company with a tremendous legacy that will extend and complement Aramark’s uniforms business,” Foss continued. “This merger will enable us to enhance our customer service experience, unlock improved efficiencies, develop new career opportunities for employees and deliver value for our shareholders. Our companies share a commitment to world-class service, and I look forward to welcoming AmeriPride to the Aramark family.”

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 U.S., and immediately establish a strong position in Canada.

Additionally, Aramark anticipates annual cost synergies of approximately $70 million, which it expects will be fully realized by the fourth fiscal year after closing.

Transaction Details

The Board of Directors of Aramark has unanimously approved both transactions, which were also unanimously approved by the Board of Managers of Avendra and Board of Directors of AmeriPride, respectively. The transactions are expected to close by the end of calendar year 2017, subject to customary closing conditions and regulatory approvals.

Aramark will finance the transactions through the issuance of new debt, and has received fully committed financing.

For the Avendra transaction, J.P. Morgan acted as lead financial adviser to Aramark, while Simpson Thacher & Bartlett LLP acted as legal counsel. For the AmeriPride transaction, Goldman Sachs & Co. LLC and Morgan Stanley & Co. LLC acted as lead financial advisers and Morgan, Lewis & Bockius LLP acted as legal counsel. Credit Suisse acted as the financial adviser to AmeriPride, while Dorsey & Whitney LLP acted as legal counsel. Goldman Sachs & Co. LLC acted as financial adviser and Latham & Watkins LLP provided legal counsel to Avendra, LLC.