Aramark Outlook Revised To Negative, Debt Ratings Put On CreditWatch Negative, On Acquisition Announcements

U.S.–based Aramark announced definitive agreements to acquire group purchasing organization (GPO) Avendra for $1.35 billion, and uniform and linen rental company AmeriPride for $1 billion. Aramark will finance both transactions through the issuance of new debt. We believe these highly strategic but leveraged acquisitions will weaken Aramark's credit metrics and estimate adjusted debt to EBITDA will increase to about 5x pro forma for the transactions from the mid-3x area at the end of fiscal year 2017. We are affirming our 'BB+' corporate credit rating on Aramark but revising our outlook to negative from stable. Concurrently, we are placing our issue-level ratings, including the 'BBB-' rating on the senior secured credit facilities and 'BB+' rating on the senior unsecured notes, on

...+ U.S.¡based Aramark announced definitive agreements to acquire group purchasing organization (GPO) Avendra for $1.35 billion, and uniform and linen rental company AmeriPride for $1 billion. Aramark will finance both transactions through the issuance of new debt. + We believe these highly strategic but leveraged acquisitions will weaken Aramark's credit metrics and estimate adjusted debt to EBITDA will increase to about 5x pro forma for the transactions from the mid-3x area at the end of fiscal year 2017. + We are affirming our '##+' corporate credit rating on Aramark but revising our outlook to negative from stable. Concurrently, we are placing our issue-level ratings, including the '###-' rating on the senior secured credit facilities and '##+' rating on the senior unsecured notes, on CreditWatch with negative implications. + The negative outlook reflects the near-term integration and execution risk associated with these acquisitions and the potential for a lower rating over the next...

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