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Caterer Sodexo weighs acquisition of US rival Aramark, Bloomberg News reports

Published 09/25/2024, 08:21 PM
Updated 09/26/2024, 04:40 AM
© Reuters. FILE PHOTO: The logo of French food services and facilities management group Sodexo is seen at the company headquarters in Issy-les-Moulineaux near Paris, France, November 30, 2018. REUTERS/Gonzalo Fuentes/File Photo
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By Anna Peverieri, Leo Marchandon and Surbhi Misra

(Reuters) -Sodexo is exploring a potential acquisition of its U.S. rival Aramark, Bloomberg News reported on Wednesday, sending the shares of the French food catering firm lower on Thursday.

Sodexo (EPA:EXHO) has been periodically discussing the deal with food and facilities management provider Aramark in recent months, the report said, citing people familiar with the matter.

However, there is no guarantee that the talks will lead to a deal and, in any case, a potential deal could face antitrust scrutiny. Sodexo would also need to secure the funds for such a sizeable acquisition, the report added.

Contacted by Reuters, Aramark and Sodexo declined to comment on the report.

Philadelphia-headquarterd Aramark, which provides services across 15 countries, has a market capitalization of over $9.8 billion, as per LSEG data. Its shares closed broadly flat on Wednesday after rising initially.

"The move in Aramark's share price yesterday would suggest that Sodexo will have to pay up for the shares," Morningstar analyst Michael Field said on Thursday.

Sodexo's shares fell 7% by 0810 GMT, among the worst performers on Europe's benchmark STOXX 600 index. Earlier in the session, they touched their lowest price since late February at 68.10 euros per share.

Analysts at Oddo said in a note that they valued the deal at around 13 billion euros ($14.5 billion), which could require Sodexo to issue more shares or raise equity to finance the deal, diluting the earnings per share for its existing shareholders.

© Reuters. FILE PHOTO: The logo of French food services and facilities management group Sodexo is seen at the company headquarters in Issy-les-Moulineaux near Paris, France, November 30, 2018. REUTERS/Gonzalo Fuentes/File Photo

Sodexo, which provided catering for the Paris Olympic Games and the Paralympics this summer and spun off its voucher business Pluxee at the start of February, is still raising prices to cushion the impact of high inflation, though at a slower pace.

($1 = 0.8979 euros)

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