Sodexo down as reported potential purchase of Aramark weighs

Investing.com -- Sodexo (EPA:EXHO ) is considering a possible acquisition of its U.S. competitor Aramark (NYSE:ARMK ), Bloomberg News reported late on Wednesday, sending shares of the French food catering company down to 7.8% on Thursday.

The report, citing sources familiar with the situation, said that Sodexo has been in ongoing discussions about the deal with Aramark, a provider of food and facilities management.

“There may be logic in a combination from SW’s perspective in boosting its US procurement/sales/brands but we question the financials and execution of such a potentially large integration,” said analysts at Barclays in a note. 

However, it remains uncertain whether these discussions will result in a formal agreement. 

“However, given market share positions, we suspect anti-trust may be an issue in some regions,” said analysts from Jefferies in a note.

Any potential acquisition could also face scrutiny from antitrust regulators, and Sodexo would need to secure the necessary funds for such a significant purchase, the report added.

“Strategically, Sodexo has lagged peers' net-new growth in recent years, so Aramark would be a helpful growth engine with likely meaningful synergies,” Jefferies added.

Source: Investing.com