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Aramark agrees to $6.3b buyout

CEO-led deal to take No. 1 US food-service company private

PHILADELPHIA -- Aramark Corp., the nation's largest food-service company, said yesterday it agreed to be acquired by an investment group led by its longtime chief executive for $6.3 billion, plus the assumption of about $2 billion in debt.

Aramark shareholders will get $33.80 in cash for each share, an improvement upon the $32-per-share initial bid made by the same group in May. The purchase price represents a 20-percent premium over Aramark's closing stock price April 28, the last trading day before the first bid.

An Aramark spokeswoman said chairman and chief executive Joseph Neubauer will contribute up to $250 million. The deal is expected to close by early next year.

It is Neubauer's second time leading an Aramark management buyout.

He first did it in 1984 to thwart corporate raiders who attempted to mount a hostile takeover. Aramark went public in 2001, three months after the Sept. 11 terrorist attacks. Share performance has been uneven.

``It's simply that he has seen that the public markets haven't really rewarded the company," said Bruce Simpson, an analyst at William Blair & Co. ``He's putting the money where his mouth is."

Philadelphia-based Aramark -- whose business includes serving everything from steaks in executive dining rooms to pasta in corporate cafeterias at 1,200 locations nationwide -- will become a private company after the transaction closes.

Simpson said the company's disclosure that Neubauer's shares will only have one vote each -- instead of the 10 they are entitled to -- put pressure on the stock because it adds uncertainty to the deal.

The chief executive and his family hold a 16.8-percent stake in Aramark's class B shares, but Neubauer's voting power will be less than 5 percent when shareholders vote on the deal.

Wall Street also could be signaling its disappointment that the second buyout bid wasn't higher, said Thomas Burnett, director of research at Wall Street Access. The New York research firm calculated a ``fair" deal to be $35 per share.

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