Breakingviews - Franco-US food M&A is $10 bln recipe for heartburn
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Sep 26 2024
0mins
Source: Reuters
Sodexo's Potential Acquisition of Aramark: French catering group Sodexo is reportedly considering a $10 billion acquisition of U.S. rival Aramark, but investor concerns have led to a 7% drop in Sodexo's shares due to the high debt risks and low expected returns associated with such a deal.
Investor Reactions and Market Context: Recent acquisitions in the business-services sector have negatively impacted acquirers' share prices, raising doubts about the viability of large mergers like that of Sodexo and Aramark, especially given the potential for complicated integrations and heavy debt burdens.
Analyst Views on ARMK
Wall Street analysts forecast ARMK stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for ARMK is 45.33 USD with a low forecast of 43.00 USD and a high forecast of 49.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
10 Analyst Rating
9 Buy
1 Hold
0 Sell
Strong Buy
Current: 39.330
Low
43.00
Averages
45.33
High
49.00
Current: 39.330
Low
43.00
Averages
45.33
High
49.00
About ARMK
Aramark is a global provider of food and facilities services to education, healthcare, business and industry and sports, leisure, and corrections clients. The Company operates through two segments: Food and Support Services United States (FSS United States) and Food and Support Services International (FSS International). The FSS United States segment consists of five sectors, which include business and industry, education, healthcare, sports, leisure and corrections, and facilities and others. Its FSS International segment provides a similar range of services as those provided to its FSS United States segment clients and operates in each of the sectors. The Company provides food and beverage services, including catering and retail services, and facilities services, including plant operations and maintenance, custodial, housekeeping, landscaping and other services. The Company's core market is the United States, which is supplemented by an additional 15-country footprint.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
