Food-service giant Aramark has agreed to acquire two private companies for a total of $2.35 billion in a move to strengthen its competitive position in its food, facilities and uniforms businesses.
The acquisitions of Avendra, a hospitality procurement services provider that manages $5 billion in purchasing for major hotel chains, and AmeriPride, a leading uniform and linen rental and supply company, are Aramark’s largest since it went public for a third time in 2013.
The company had a history of relatively small acquisitions before announcing Monday it would buy Avendra for $1.35 billion and AmeriPride for $1 billion. The net purchase price of the deals will be $1.05 billion after adjustments for expected tax benefits.
“Today is an historic day at Aramark as we announce we will join forces with two leading companies that will significantly improve how we service our customers, while expanding our capabilities and scope in critical areas of our business,” CEO Eric Foss said in a news release.
According to the Philadelphia Inquirer, the Avendra deal will complement Aramark’s 2016 purchase of HPSI, a group-purchasing firm for the healthcare, hospitality, and higher-education sectors, while the AmeriPride deal will significantly increase its uniform business, which posted revenue of $1.56 billion for the year ended Sept. 30, 2016.
AmeriPride has $600 million in annual revenue. “AmeriPride is a highly-respected company with a tremendous legacy that will extend and complement Aramark’s uniforms business,” Foss said.
Avendra was founded in 2001 by hospitality leaders Marriott, Hyatt, Fairmont Hotels, ClubCorp, and IHG. It manages purchasing spend for more than 650 companies, including more than half of the Top 30 hotel chains.
“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.
Aramark also expects cost synergies of about $40 million from the purchase of Avendra and about $70 million from the AmeriPride deal. Separately, Marriott, which owns 55% of Avendra, said it would receive about $650 million from the sale.