Investing.com Reports Potential Purchase of Aramark by Sodexo Causes Stock to Plummet

Investing.com — Sodexo (EPA:) is considering a possible acquisition of its U.S. competitor Aramark (NYSE:), Bloomberg News reported late on Wednesday, sending shares of the French food catering company down to 7.8% on Thursday.

The report, citing sources familiar with the situation, said that Sodexo has been in ongoing discussions about the deal with Aramark, a provider of food and facilities management.

“There may be logic in a combination from SW’s perspective in boosting its US procurement/sales/brands but we question the financials and execution of such a potentially large integration,” said analysts at Barclays in a note.

However, it remains uncertain whether these discussions will result in a formal agreement.

“However, given market share positions, we suspect anti-trust may be an issue in some regions,” said analysts from Jefferies in a note.

Any potential acquisition could also face scrutiny from antitrust regulators, and Sodexo would need to secure the necessary funds for such a significant purchase, the report added.

“Strategically, Sodexo has lagged peers’ net-new growth in recent years, so Aramark would be a helpful growth engine with likely meaningful synergies,” Jefferies added.