Stadium food vendor Aramark Corp. is preparing to return to the
public markets with an initial public offering, according to people
familiar with the company's thinking, paving the way for one of the
country's largest closely-held companies to return to public
ownership.
The company is in early discussions with banks and analysts
about potentially going public, the people said, though they
cautioned that the timing and valuation of the deal has not been
decided. A bake-off to select banks to manage the deal is expected
to begin in the coming weeks, they said.
Philadelphia-based Aramark, a global provider of concessions,
uniforms and other services for stadiums, schools and hospitals,
had about $13.5 billion in sales during the fiscal year ended Sept.
28, according to securities filings. It was taken private in 2007
by its then-chief executive, Joseph Neubauer, and a group of
private-equity firms. The buyers paid about $6.3 billion and took
on about $2 billion of Aramark's debt.
A company spokesman didn't comment.
Private-equity firms have been pursuing IPOs of their portfolio
companies amid a rise in share prices and increased appetite for
equities by large investors. The deals have continued to come
despite a surge in market volatility in recent weeks, though in
some of the most-recent deals companies have made concessions in
the size and price of their offerings.
Aramark's ownership is divided among Warburg Pincus LLC, Thomas
H. Lee Partners LP, CCMP Capital Investors and GS Capital Partners,
a unit of Goldman Sachs Group Inc. (GS). Each owns about 21% of the
company, according to the company's most recent annual report. Mr.
Neubauer, who remains chairman, holds about 10% of the company,
according to the report.
To fund the 2007 buyout, Mr. Neubauer contributed his stock,
worth about $250 million at the time, and the buyout shops together
added about $1.7 billion in cash. The remainder was covered with
new debt.
In 2011, Aramark sold more debt to fund a $712 million dividend
payment to its owners. That same year Aramark spun-out Seamless
North America LLC, giving the buyout firms stakes in the
online-food ordering company. Seamless in May said it was merging
with competitor GrubHub Inc.
Aramark carries a large debt load as a legacy of its buyout,
with $5.4 billion in long-term borrowings as of the end of the last
fiscal year, against $1.1 billion in adjusted earnings before
interest, taxes, depreciation and amortization in that period, or
Ebitda.
Like other companies preparing for an IPO, Aramark in February
and March took advantage of strong credit markets to refinance many
of its debts, pushing back maturity dates and also reducing
interest costs.
It also hired a new chief executive in May 2012, Eric Foss, who
was previously a top manager at PepsiCo Inc. (PEP).
Aramark was founded in 1936 by Davre Davidson, who sold peanuts
from the back of his Dodge and planned to install vending machines
in offices and factories, the company's website says. Mr. Davidson
eventually combined his company with a similar Chicago firm, and
the pairing went public in 1959 as the Automatic Retailers of
America.
Mr. Neubauer joined the company in 1979, and in 1984 led a
management buyout aimed at fending off a hostile takeover attempt.
Aramark returned to public ownership with a 2001 IPO. He then
helped arrange the 2007 buyout--a rare instance of an executive
taking the same company private twice.
Aramark's sales in the six-months ended March 29 were $6.9
billion, up 2.5% from the same period a year ago, according to its
most-recent quarterly report. An uptick in sales to hospitals and
schools, plus international growth, was offset by the National
Hockey League lockout and the impact of Hurricane Sandy, the
company said.
The bulk of Aramark's business is services, such as operating
concessions, to big public facilities and events. Its U.S. clients
include 38 teams in the four major U.S. sports, 16 national and
state parks, over 1,000 school systems and colleges, and about
1,100 health-care facilities, according to the company. Aramark
employed about 259,000 people in 22 countries, as of last
September.
Its other business are services outside North America, such as
providing food service at the Athletes' Villages at the Olympic
Games in London last year, and sales of uniforms and related
services in the U.S., Puerto Rico and Canada.
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