Aramark to Spin Off Uniforms After Mantle Ridge Deal

The foodservices company plans to shed its uniform unit, about 2-1/2 years after it settled with the activist, which helped install a CEO with a strong M&A background.

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Aramark (ARMK) on Tuesday, May 10, announced it plans to separate its uniform services business into an independent publicly traded company.

The food and facilities services company said it will structure the spinoff as tax-free for shareholders, and it will be completed at the end of fiscal 2023.

The Deal reported in October 2019 that the installation of a new CEO at the time, John Zillmer, suggested a spinoff or sale of the Philadelphia-based company’s uniform business could materialize.

Earlier that month, Aramark had settled with Paul Hilal’s Mantle Ridge LP in a deal where four directors were removed and replaced with six new members at the same time that Zillmer — an executive with close ties to the activist — was installed.

Hilal obtained a board seat as part of the settlement — and he still holds the position. Hilal’s activist fund also appears to still hold a large stake — it reported on Feb. 11 owning 2.7 million Aramark shares as of year-end 2021, the same amount it held in the third quarter. Mantle Ridge in 2019 initially disclosed an activist 20% economic interest in Aramark, which included about 2.4 million common shares and a large derivatives position. Mantle Ridge could still owns a large derivatives stake.

The fund did not return a request for comment.

Zillmer is no stranger to M&A. He was CEO of Allied Waste Industries Inc., a solid waste collection business, when it was sold in 2008 for $6.1 billion to Republic Services Inc. (RSG). Between 2009 and 2012 Zillmer was CEO of Univar Solutions Inc. (UNVR), a chemicals and ingredients company, which made a number of acquisitions under his oversight. He also previously held senior positions at Aramark, according to relationship mapping service BoardEx, a sister company to The Deal.

Aramark’s shares plunged amid the height of the Covid-19 pandemic in 2020, dropping from about $46 a share to as low as $17 in a matter of months, before recovering substantially. Aramark shares, which closed Monday at $34.27, were up 2.3% on Tuesday morning to $35.08.

AramarkCintas Corp. (CTAS) and Unifirst Corp. (UNF) control roughly half of the U.S. uniform rental market.

Wachtell, Lipton, Rosen & Katz partners David Katz, Alison Preiss, Emily Johnson, Deborah Paul and Andrea Wahlquist provided legal advice to Aramark on the spinoff plan. Goldman, Sachs & Co.’s Bill Jacobs and JPMorgan Securities LLC’s Jamie Grant provided financial advice to Aramark.

About the author

Ronald Orol
Senior Editor at | + posts

Ronald Orol leads coverage of activist hedge fund managers, a high-profile group of corporate investors who press for blockbuster deals and were the subject of his book “Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World.” Ron produces the Activist Daily and Activist Weekly briefings, which offer exclusives, trend pieces and breaking analysis about insurgent investors and their M&A efforts. Ron also authored “Corporate Governance in the Era of Activism,” a digital handbook for CNBC’s Jim Cramer. He previously worked as a financial regulation and activism reporter at MarketWatch and Dow Jones Newswires.

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