Aramark Climbs After Raising $725 Million in NFL Caterer IPO

Aramark Holdings Corp. (ARMK), which sells beer at sports events for teams including the Chicago Bears, jumped in its trading debut after raising $725 million in its initial public offering.

The shares increased 14 percent to $22.70 as of 4 p.m. in New York. The company and shareholders, including Goldman Sachs Group Inc. and Warburg Pincus LLC, sold 36.25 million shares for $20 each, according to a statement yesterday.

Aramark, based in Philadelphia, was acquired in 2007 for $8.3 billion, including debt, by a group including Goldman Sachs, CCMP Capital Advisors LLC, JP Morgan Chase & Co., Thomas H. Lee Partners LP and Warburg Pincus. At the IPO price, the sponsors are showing an unrealized profit of about 135 percent of their $1.7 billion equity invested, excluding a 2012 spinoff of Seamless North America LLC, data compiled by Bloomberg show. Aramark plans to use the proceeds from the IPO to repay debt.

“As we look at our uses of cash, we’ll continue to invest in the business through capital expenditures, mergers and acquisitions, and returning cash to shareholders,” Eric Foss, the chief executive officer of Aramark, said by phone. “We’ll pay down our debt, but we feel very comfortable with our financial flexibility at this time.”

Enterprise Value

The sponsors purchased Aramark in 2007 at an enterprise value 8.5 times its adjusted earnings before interest, taxes, depreciation and amortization, data compiled by Bloomberg show. Today’s trading gives Aramark an enterprise value of about $10.9 billion, or 10.3 times 2013 Ebitda, the data show.

Representatives for JP Morgan, Thomas H. Lee, and Warburg Pincus declined to comment on the paper return their firms received. A spokeswoman for Goldman Sachs also declined to comment, while a representative for CCMP Capital Advisors didn’t respond to a request for comment.

In addition to Chicago’s Soldier Field, Aramark operates food-service stadiums housing the Minnesota Vikings and Tampa Bay Buccaneers. Its sports and leisure segment represented 12 percent of revenue in the year through Sept. 27.

Aramark also serves corporations, such as Airbus SAS, educational facilities such as American University and the Ohio and Michigan departments of corrections. The company reported sales of $13.9 billion in in the year to Sept. 27, an increase of 3.3 percent over the year-earlier period, driven by the sports and education segments, regulatory filings show.

Total industry revenue will increase at an annualized rate of 2.6 percent to $45.8 billion over the next five years, according to an IBISWorld report.

Goldman Sachs, JPMorgan, Credit Suisse AG and Morgan Stanley managed the Aramark IPO. Aramark is listed on the New York Stock Exchange under the symbol ARMK.

To contact the reporters on this story: Leslie Picker in New York at lpicker2@bloomberg.net; David Carey in New York at dcarey13@bloomberg.net

To contact the editor responsible for this story: Mohammed Hadi at mhadi1@bloomberg.net

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