Aramark Private Equity Backers Unloading More Shares

Aramark is one of the top providers of food, facilities and uniform services to industries such as education, health care, business and industry, and it has sports, leisure and corrections clients. If you have been to one of the large sports stadiums around the country, chances are high they have served your food and beverages.

The named private equity backers below held roughly 140 million shares prior to this offering, for a combined stake of more than 59%. The new filing with the U.S. Securities and Exchange Commission (SEC) is for up to 22,500,000 common shares, but that would go up to 25,875,000 if the overallotment shares are exercised by the underwriting group.

Aramark’s underwriting syndicate for this secondary was shown to include the firms Goldman Sachs and J.P. Morgan, both of which are also the parent companies of the private equity groups which still own shares and are selling in the group of selling shareholders. Other syndicate firms named in the SEC filing were Credit Suisse and Morgan Stanley.

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While the filing indicated a proposed maximum aggregate per share offering price of $29.26, that figure was an estimate only and was based on the average of the high and low prices of the common stock on November 26, 2014. Still, this is close to $750 million in net proceeds in total.

For a comparison of the proposed sale now versus the IPO last December, the original offering of 36,250,000 shares was broken down as 28,000,000 shares offered by Aramark itself and 8,250,000 shares were offered by the private equity sponsors. That total IPO was also $725 million or so, less than the dollars proposed in this sale due to the stock’s having appreciated close to 50% in the past year.

This is not the first such stock sale by private equity backers. At the end of last May, Aramark priced a secondary offering of 20,000,000 common shares at $25.50 per share. The following entities and their partners own over 59% of the outstanding Aramark shares prior to this offering. We have included the share count and the stake held by each:

• GS Capital Partners, of Goldman Sachs Group Inc. (NYSE: GS), has 34,826,250 shares, for a 14.85% stake.
• CCMP Capital Investors has 17,413,124 shares, for a 7.43% stake.
• J.P. Morgan Partners, of J.P. Morgan Chase & Co. (NYSE: JPM), has 17,413,124 shares, for a 7.43% stake.
• Thomas H. Lee Partners has 34,826,251 shares, for a 14.85% stake.
• And Warburg Pincus has 35,565,486 shares, for a 15.17% stake.

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A review of other top institutional shareholders, which are not selling holders in this offering, also includes the number of shares and the percentage of the outstanding shares as of September 30, as follows:

• FMR (Fidelity) holds 15,232,927 shares, for a 6.54% stake.
• Vanguard Group holds 6,600,005 shares, for a 2.83% stake.
• First Manhattan Company holds 4,466,281 shares, for a 1.92% stake.