Neubauer's legacy at Aramark will include navigating markets

On the heels of the announcement that Joseph Neubauer will step down as chairman of Aramark Corp. in February, the Philadelphia company said Wednesday that existing shareholders intended to sell 22.5 million shares.

The sellers are private equity firms that took Aramark private in 2007 and public again - for the third time in its history - one year ago, and still own 60 percent of the $15 billion food-services giant.

The Securities and Exchange Commission filing did not say if Neubauer, who joined Aramark in 1979 and became chief executive in 1983, would sell any of his shares. But if history holds, it is likely that he will.

Neubauer, who for at least two decades has been largely reluctant to speak to reporters, was traveling and unavailable for comment Wednesday.

Neubauer has had a remarkable tenure at the helm of Aramark, including 30 years as chairman. With Neubauer at the top, Aramark grew from $2.5 billion to $13 billion in annual revenue in 2012, when he stepped down as CEO.

Even more extraordinary was his ability to navigate the capital markets, taking the company private on two occasions and then public again, always backed by blue-chip Wall Street investment banks.

Very few U.S. companies have gone public three times (as Aramark did in 1960, 2001, and 2013), and private twice (as Aramark did in 1984 and 2007), experts said.

With the exception of Aramark's initial public offering in 1960, Neubauer played a central role in all of the transactions, collecting hundreds of millions of dollars along the way.

In 1984, soon after Neubauer took over as Aramark's chairman, when he was just 43, he led the company's first going-private transaction, a leveraged buyout worth $889.7 million. In that deal, Neubauer paid about $4 million for a 7 percent stake that made him Aramark's largest share owner.

That was just the start of Aramark transactions that steadily increased Neubauer's wealth.

In the 2007 going-private deal, for example, Neubauer sold Aramark shares worth more than $500 million, but still owned 10 percent of the company when it listed on the New York Stock Exchange last December.

Neubauer, now 73, sold shares worth $27.3 million in Aramark's public offering in December 2013 and $51 million more in a secondary offering in May 2014.

The latest registration statement said Neubauer still owned 16.41 million shares worth $488.8 million at Wednesday's close of $29.78, down 13 cents.

At that price, Aramark's shares are up 49 percent since last year's offering.

Current price targets on the stock by five Wall Street analysts range from $34 to $36 per share, according to Bloomberg News, an expression of confidence in Eric Foss, Neubauer's successor - first as CEO in 2012 and as chairman next year.

"Change can be good, and this seems to be an orderly transition for Aramark, which otherwise has a deep bench of longtime management both running the company and serving on its board," said Vicki Bryan, a high-yield analyst at Gimme Credit L.L.C., a corporate bond research firm.

215-854-4651