Sodexo deal for Aramark would approach ‘merger of equals,’ says Jefferies

After Bloomberg reported overnight that Sodexo (SDXAY) is exploring a potential acquisition of U.S. peer Aramark (ARMK), Jefferies says Aramark’s recent spin-off of its uniform business, Vestis, makes “overlap more appealing.” However, with Aramark shares up about 35% year-to-date and a roughly $10B market cap, such an acquisition would be “sizable, approaching a merger of equals,” the analyst added. Strategically, Sodexo has lagged peers’ net-new growth in recent years, so Aramark would be “a helpful growth engine with likely meaningful synergies,” but the firm suspects anti-trust may be an issue in some regions given market share positions, the analyst tells investors. Jefferies has a Buy rating on Sodexo shares.