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Marriott: Avendra To Be Sold To Aramark In $1.35 Bln Deal - Quick Facts

Marriott International (MAR), which holds 55 percent interest in Avendra LLC, announced Monday that Avendra's owners have reached a binding agreement to sell the firm to Aramark (ARMK) for $1.35 billion.

Avendra's founding shareholders, Marriott, Hyatt, Accor, ClubCorp and IHG, expect to receive approximately $1.18 billion in cash proceeds from the transaction after redemption of management participation rights, transaction costs, and repayment of Avendra's outstanding debt.

Marriott expects to receive approximately $650 million for its stake in Avendra.

Avendra was formed in 2001 through the merger of Marriott's North American procurement division with the procurement businesses and purchasing power of the other founding shareholders. At present, over half of Avendra's revenues come from providing procurement and related services to non-founders.

Marriott's original investment in Avendra totaled $13 million and was recovered from dividends from the business. Marriott committed to the owners of Marriott's hotels that the benefits derived from Avendra, including any dividends or sale proceeds above the original investment, would be used for the benefit of the hotels in its system.

The significant proceeds from the sale of Avendra to Aramark will be used over time in this manner.

Under the deal, Marriott will enter into a 5-year procurement service agreement with Aramark. While the transaction will benefit owners and franchisees of its hotels, Marriott expects the transaction will be immaterial to its financial results.

The transaction is subject to the expiration or termination of the waiting period under the Hart Scott Rodino Antitrust Improvements Act and satisfaction of other customary closing conditions. The parties expect the transaction to close before year-end.

Goldman Sachs & Co. LLC is serving as financial advisor to Avendra. Gibson Dunn is serving as legal advisor to Marriott in connection with the transaction.

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