The New York Post criticized the $6 billion buyout of Philadelphia-based outsourcing company Aramark Corp. "as one of the least likely takeover targets imaginable for the deal-hungry leveraged buyout shops of Wall Street." First, it seems as if the Post has a bone-to-pick with Thomas H. Lee Partners, one of the participants in the deal. The article specifically singles out the Boston-based buyout firm even though there are three other firms involved: Goldman Sachs Capital, J.P. Morgan Partners LLC and Warburg Pincus. The lambasting of other recent Tom Lee deals such as Hawkeye Holdings Inc. and Refco sets the tone of the article's negative view of the Aramark deal. However, Aramark is a perfect buyout candidate because of the nature of its businesses: a service business with stagnant growth potential. Such businesses are the bread-and-butter of the LBO world. The Post points out how the company makes 60% of its revenue from the food service unit as if that's a bad thing. Rather, it is the diamond in the rough for the buyout firms. Instead of flipping the whole business after a few months as the Post suggests is likely, the food service unit gives the firms the opportunity to unload the weaker units such as janitorial and uniforms, then ferry the new one-trick pony back to the New York Stock Exchange. —Matthew Wurtzel
See story from The New York Post
See related story from The Deal's Arbitrage channel
See related story from The Deal
Continue reading below
