Aramark gets $5.8 billion offer

May 02, 2006|By BLOOMBERG NEWS

NEW YORK -- Aramark Corp., the food-service company that runs concessions at Oriole Park at Camden Yards and other sports venues, received a $5.8 billion takeover offer from a group led by its chairman and Goldman Sachs Group Inc.

The group, which also includes JPMorgan Chase & Co., Thomas H. Lee Partners LP and Warburg Pincus LLC, bid $32 a share, Aramark said yesterday. That's 14 percent above the Philadelphia company's closing price Friday.

The company's shares rose $5.79, or nearly 21 percent, to close at $33.90 on the New York Stock Exchange. They've gained 12 percent in the past year.

Aramark's shares surged as high as $34.95 as investors bet that the company, which also operates college and corporate cafeterias, would eventually fetch more from the buyout group or another acquirer. The company's board formed a committee of independent directors to review the proposal, Aramark said.

"There exists for insiders an opportunity to sell the company to a rival bidder or compete in a bidding war for the company," wrote Michael Fox, an analyst at JPMorgan Chase, in a report.

Private-equity firms have announced more than $120 billion in takeovers this year, up from $83 billion in the comparable period of 2005, according to data compiled by Bloomberg. Pressure to meet quarterly earnings targets and abide by new accounting and governance laws have pushed some companies to go private.

Leveraged buyout specialists usually borrow about two-thirds of the purchase price to finance an acquisition. Their goal is to improve the operating performance of the companies they buy, often by cutting costs, and then sell the companies in two to three years to make a profit.

Joseph Neubauer, Aramark's chairman and chief executive officer, led a 1984 leveraged buyout of the company. Aramark sold shares to the public in 2001 in an offering managed by Goldman Sachs and JPMorgan, two New York investment banks.

"I have a long personal history with these firms," Neubauer said.

Andrea Raphael, a spokeswoman for GS Capital Partners, Goldman Sachs' buyout unit, declined to comment. Jeffrey C. Walker, a managing partner at JPMorgan's JPMorgan Capital Partners unit; Scott M. Sperling, co-president of Boston's Thomas H. Lee Partners; and Julie Johnson Staples, a spokeswoman for New York's Warburg Pincus, didn't returns calls seeking comment.

Aramark has 120.2 million B shares that are publicly traded. It also has 60.5 million A shares, which don't trade publicly and have 10 times the voting rights of the B shares.

Aramark insiders own 51.6 percent of the Class A shares and 21.5 percent of Class B shares, JPMorgan's Fox wrote, based on the company's most recent proxy filing.

Aramark's profit rose 72 percent to $288.5 million in 2005 from $168 million in 2000. Sales soared 50 percent to almost $11 billion from $7.26 billion.

The company employed about 242,500 employees and operated in 20 countries as of November and provided residential dining to universities, jails, convention centers and senior living facilities. It provides concessions at 14 Major League Baseball parks including Fenway Park in Boston and Shea Stadium in New York.

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