Sodexho Alliance aiming to control Marriott affiliate

Paris catering group seeks 52% of business based in Gaithersburg

January 26, 2001|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Sodexho Alliance SA, one of the world's largest catering groups, said yesterday that it had offered to buy full control of Gaithersburg-based affiliate Sodexho Marriott Services Inc. for $900 million in cash.

Paris-based Sodexho Alliance said the offer was equivalent to $27 a share to acquire 52 percent of Sodexho Marriott, a move analysts expect would boost Sodexho Alliance's earnings.

The catering group owns 48 percent of Sodexho Marriott, which was formed in 1998 when Sodexho's North American operations merged with Marriott Management Services, a unit of Marriott International Inc.

The $27-a-share offer is a 9 percent premium over Sodexho Marriott's Wednesday close of $24.87 a share. Yesterday the stock rose $3.62, closing at $28.50 a share.

"Our board of directors has received the proposal and is taking it under advisement," said Leslie Aun, a spokeswoman for Sodexho Marriott. "There is no further comment at this time."

Sodexho Alliance said it would finance the deal through a combination of equity and debt. Goldman Sachs is the adviser on the transaction.

Company officials could not be reached yesterday for further comment.

"It's not an unexpected move; it's not a bad move. The price is not unreasonable," said Nigel Reed, an analyst at BNP Paribas in London, adding that it would enhance earnings immediately even if Sodexho Alliance financed the deal entirely by issuing shares.

Sodexho Marriott Services is the largest provider of food and management services in North America, with $4.7 billion in sales for the fiscal year that ended Sept. 1. The company provides food service, housekeeping, groundskeeping, plant operations and maintenance to corporations, hospitals, schools and universities.

Sodexho Alliance, founded in 1966 by Chairman Pierre Bellon, has $9.7 billion in annual sales and operations in 70 countries.

Combined, the companies would surpass rival Granada Compass Plc in annual revenue.

"This is an industry with growth potential that's also fairly low risk. It's got quite a lot going for it," Reed said. He said he regards the deal as positive.

If an offer is accepted, the deal could not close until after March 27 because terms of the 1998 Sodexho-Marriott merger prohibit Sodexho Alliance from increasing its stake for three years.

In a statement yesterday, Bellon, the Sodexho Alliance chairman, said his company has confidence in the management of Sodexho Marriott. "We do not anticipate any change in the strategy and operations of Sodexho Marriott Services," Bellon said.

Wire services contributed to this article.

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