Aramark (ARMK 42.74, +0.41) has jumped 1.0% after announcing a pair of strategic acquisitions. Today's gain puts the stock at a fresh record high.
The customer service company, which provides food services, facilities services, and uniform services, announced the acquisitions of Avendra and AmeriPride Services.
Avendra—a hospitality procurement services provider in North America—will be acquired for $1.35 million or a net sum of $1.05 billion after adjusting for the value of anticipated tax benefits. Avendra manages almost $5 billion in annual purchasing spend for more than 650 companies stretched across 8,500 locations. This group includes more than half of the top 30 hotel chains. Avendra's founding shareholders—Marriott, Hyatt, Accor, ClubCorp, and IHG—expect to receive $1.18 billion in cash proceeds from the sale.
Aramark expects that the acquisition of Avendra will enable both companies to grow their customer base outside of their traditional industries. The company expects annual procurement cost synergies will reach $40 million by the third fiscal year after closing.
Meanwhile, AmeriPride Services—a uniform and linen rental and supply company in the U.S. and Canada—will be acquired for $1.00 billion or $850 million after adjusting for the value of anticipated tax benefits. AmeriPride Services has an annual revenue of about $600 million. Aramark expects to realize roughly $70 million in annual cost synergies by the fourth fiscal year after closing.
Following the acquisition of AmeriPride, Aramark will serve nearly 500,000 customers. The company expects to benefit from scale and enhanced capabilities, giving Aramark an established position in Canada.