(Bloomberg) -- A potential $10 billion acquisition of catering firm Aramark by France’s Sodexo SA would go against the typical pattern of American companies targeting European rivals.
Over the past five years, there have been nine other proposed deals of at least that size involving a European firm as the suitor for a US company, according to data compiled by Bloomberg. Those transactions, which include LVMH’s acquisition of Tiffany & Co., and Novo Holdings A/S’s planned acquisition of Catalent Inc., have a total value of about $163 billion, the data shows.
That’s less than half the size of proposed deal volumes going the other way, with 19 potential tieups involving US companies targeting European ones, totaling $397.5 billion. The data includes deals which didn’t ultimately complete, such as DraftKings Inc.’s aborted bid for Entain Plc, but are an indication of how much more aggressive US firms have been in coming across the Atlantic.
Notable examples include KKR & Co.’s €22 billion ($24.5 billion) purchase of Telecom Italia SpA’s land-line network and the acquisition of nicotine pouch maker Swedish Match AB by Philip Morris International Inc.
Sodexo is exploring a possible acquisition of Philadelphia-based Aramark, people familiar with the matter told Bloomberg News. Aramark shares were up 3.5% to $38.51 a share as of 9:55 a.m. in New York, giving the company a market capitalization of $10.2 billion.
Part of the reason that European firms are more likely to be prey than predator is their cheaper valuations. Sodexo trades at 12 times its future earnings while Aramark shares have a multiple of 19 times.
Johanna Jourdain, an analyst at Oddo Bhf, described Aramark’s valuation as “excessive” in a note to clients, while other analysts were concerned about both companies having high levels of debt. Sodexo shares fell as much as 14% before paring the drop to about 5%.
--With assistance from Julien Ponthus and James Cone.
(Updates share-price moves.)
©2024 Bloomberg L.P.
