Aramark, the Philadelphia-based food services company, announced this morning that it was gobbling up both Avendra, the hospitality procurement services provider based in Rockville, Md., and AmeriPride, the uniform and linen rental and supply company with headquarters in Minnetonka, Minn.
“Aramark said it would pay Avendra $1.35 billion, or $1.05 billion in net purchase price after adjusting for anticipated tax benefits. AmeriPride’s purchase price of $1 billion came in at $850 million after adjusting for anticipated tax benefits, Aramark said,” Reuters’s Parikshit Mishra reports for US News.
“Aramark provides food, facilities and uniform services to universities, hospitals, jails and other institutions globally,” writes Annie Gasparro for the Wall Street Journal. “The company has more than 200,000 employees and a market capitalization of some $10 billion. Last year, it booked $14.4 billion in revenue. It’s been in and out of public ownership over the years, with its most recent IPO in 2013.”
“Separately, Marriott, which owns a 55% stake in Avendra, said it would receive about $650 million from the sale. Aramark also added it expected cost synergies of about $40 million from the purchase of Avendra and about $70 million from AmeriPride,” Reuters’s Mishra continues.
Avendra was formed in 2001 through the merger of Marriott's North American procurement division with the procurement businesses of the other founding shareholders — Hyatt, Fairmont Hotels, ClubCorp and IHG. More than half of Avendra's revenues now come from providing procurement and related services to non-founders, according to a Marriott release.
“Marriott's original investment in Avendra totaled $13 million and was recovered from dividends from the business. Marriott committed to the owners of Marriott's hotels that the benefits derived from Avendra, including any dividends or sale proceeds above the original investment, would be used for the benefit of the hotels in our system. The significant proceeds from the sale of Avendra to Aramark will be used over time in this manner,” the release tells us.
As part of the deal, Marriott will enter into a five-year procurement service agreement with Aramark.
Aramark traces its origins to 1936, when Davre Davidson began selling peanuts out of his 1932 Dodge in Los Angeles. By 1945, he and his brother, Henry, were running Davidson Brothers, one of the largest vending companies in California. In 1959, the brothers and William Fishman combined their vending companies to create Automatic Retailers of America, or ARA. In the Seventies, it expanded into Europe and Japan. In 1994, it unveiled its new logo and name, Aramark, under the leadership of Joseph Neubauer, who led the company for 30 years.
Eric Foss, a former Pepsi Beverages Co. executive, succeeded Neubauer as CEO in 2012 and as chairman in 2014. He majored in marketing at Ball State University.
“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,” Foss said yesterday.
AmeriPride says it operates more than 115 production facilities and service centers throughout the U.S. and Canada, providing linen, uniforms, floor mats, restroom and cleaning products to nearly 150,000 customers every week.
“We aren’t just a laundry company. We are a world class uniform and linen service company” with “hundreds of uniform, linen, toweling, and facility service products to enhance your brand,” AmeriPride crows on its website — “whether you're a small family business or a Fortune 500 company.”
“AmeriPride is a highly respected company with a tremendous legacy that will extend and complement Aramark’s uniforms business,” Foss said, projecting annual cost synergies of about $70 million for the combined entity.
The announcement of the deals by Aramark at 12:36 EDT proves once again the ability of a late Sunday/early Monday press release to fill the weekend business-news void.