French firm is buying all of Sodexho

Food service giant paying $1.08 billion for Md. company

`Nothing is changing'

Sodexho Marriott recently signed deal with Marine Corps

May 03, 2001|By Gus G. Sentementes | Gus G. Sentementes,SUN STAFF

In a move that will create the world's largest food service and facilities management group, Sodexho Alliance SA said yesterday that it will buy full control of Sodexho Marriott Services Inc., North America's largest provider of food services.

Sodexho Alliance now owns 48 percent of Sodexho Marriott. The French company said it will pay $1.08 billion in cash, or $32 per share, to acquire the rest of the company, which is based in Gaithersburg.

The $32-a-share offer is an 8.5 percent premium over Tuesday's closing price of $29.50 per share. Shares of Sodexho Marriott traded heavily yesterday and closed at a 52-week high of $31.69, up $2.19 from the previous day.

Leslie Aun, spokeswoman for Sodexho Marriott, said the company is not anticipating any layoffs or changes in its operations in North America. The headquarters will remain in Gaithersburg.

"Nothing is changing in terms of strategy," Aun said. "Our CEO, Michel Landel, will continue to run the company. ... [Sodexho Alliance] has given us every indication that they feel very positive about our company. We're just going to continue focusing on our clients and focusing on providing good service."

Sodexho Alliance's finance director, Bernard Carton, told Bloomberg News that the company expects to save about $40 million a year within three years by combining the purchasing and logistical operations of Sodexho Marriott with a recently acquired food service company in Pennsylvania.

Sodexho Alliance officials could not be reached for comment.

Sodexho Marriott said a cash tender offering for all publicly held shares will begin no later than May 21 and will be followed by a merger. The combined company will surpass Compass Group PLC of the United Kingdom in terms of annual sales and employees.

Sodexho Marriott, which recently signed an $850 million food services contract with the U.S. Marine Corps, has 111,000 employees in 5,000 locations across North America.

The company offers food service and facilities management in several sectors, including corporate and health care settings, schools and universities

Although Sodexho Marriott officials have said that the company is "recession-proof" because of its diversified businesses, analysts have said that a mature North American food-services market will leave Sodexho Alliance little room for growth.

Sodexho Alliance first offered to buy the rest of Sodexho Marriott for about $27 share, or $900 million in cash, on Jan. 24.

"The offer was made in January, so it's taken a bit of time for members of the board to evaluate and negotiate it," said Steve Brady, a Sodexho Marriott spokesman. "Finally," Brady said, "last night it was finalized."

Sodexho Marriott, with $4.7 billion in sales in the fiscal year ending Sept. 1, was formed in 1998 when Sodexho Alliance's North American subsidiary merged with Marriott Management Services Inc., a unit of Marriott International Inc.

Sodexho Alliance, which had sales of $9.5 billion last year, said it would use debt to fund the acquisition.

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