PHILADELPHIA — Aramark Corp., the nation's largest food-service company, said Tuesday 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 on 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.
Shares of Aramark fell 47 cents, or 1.4 percent, to close at $32.58 on the New York Stock Exchange.
Simpson said the company's announcement 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 CEO 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 at $35 per share.
In May, major shareholder Eminence Capital wrote a letter to Aramark's independent directors saying that the company is worth at least $40 per share. It called the initial $32-per-share bid "grossly inadequate" and warned that it would not support a deal "anywhere near that price."
The New York investment firm and its affiliates own 7.8 percent of Aramark's Class B shares.
The emergence of a competing bid wasn't seen as likely because of Neubauer's involvement and ownership stake, Simpson said. Neubauer has been at the helm since 1983, with a one-year hiatus.
"He's certainly well-tenured and the face of Aramark," the analyst said.
He also doesn't think there will be many changes to operations under the new company structure.
According to a Securities and Exchange Commission filing on the first bid, Neubauer and other top managers are expected to keep their positions once the transaction closes.
Neubauer's private equity partners are GS Capital Partners, CCMP Capital Advisors and JPMorgan Partners, Thomas H. Lee Partners and Warburg Pincus LLC. They plan to finance the deal using investment funds and borrowings.
The company's board said it will recommend that shareholders approve the deal.
With annual sales of $11 billion, Aramark employs about 240,000 people with clients in 20 nations. In addition to food services, the company also manages facilities and supplies uniforms.