The consolidation within the hospitality supply chain sector continued as today, Philadelphia-based Aramark Corp., announced two acquisitions – Avendra LLC, a purchasing group based in Bethesda, Maryland and AmeriPride Services Inc., a uniform company based in Minnetonka, Minnesota.
According to the Philadelphia Inquirer newspaper, this represents a deviation from Aramark’s history of relatively small acquisitions in recent decades. The company said Monday that it will spend $2.35 billion to buy the two separate companies, Avendra that manages $5 billion in purchasing for major hotel chains and AmeriPrides Services that will expand Aramark’s uniform-rental and linen-supply business in the United States and Canada.
The net cost of the deals, after tax benefits, is expected to be $1.9 billion. According to The Inquirer, Aramark said it will issue new debt to pay for the acquisitions.
Avendra LLC, manages purchases for 650 hospitality firms at more than 8,500 locations. Avendra — with a purchase price of $1.35 billion, brought down to $1.05 billion after anticipated tax benefits — complements Aramark’s 2016 purchase of HPSI, a group-purchasing firm for the health-care, hospitality, and higher-education sectors.
AmeriPride Services Inc., with annual revenue of about $600 million, will significantly increase the size of Aramark’s uniform business. That unit had $1.56 billion in revenue in the year ended Sept. 30., 2016. The AmeriPride purchase price is $1 billion, with the net after tax benefits expected to be $850 million.
Aramark Chief Executive Eric Foss told the Wall Street Journal in an interview that Avendra “will allow us to leverage our scale to procure food at a lower cost,” and AmeriPride “will improve our competitive position” by allowing the company to offer more services to customers, particularly in Canada.
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https://www.wsj.com/articles/aramark-to-buy-avendra-and-ameripride-in-separate-deals-1508126402
