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Merck KGaA to buy Serona and Altana for $19B

Midsize European drug makers unveiled two deals, valued at a total of more than €15 billion, or $19 billion, that underscored the pressure building on these companies to grow to stay competitive with industry titans.

German drug maker Merck KGaA agreed to buy Swiss biotechnology company Serono SA for €10.6 billion. A few hours later, Germany's Altana AG said it would sell its pharmaceutical business to Danish drug maker Nycomed for €4.5 billion.

Midsize drug companies have found it hard to compete with the likes of Pfizer Inc. and GlaxoSmithKline PLC, which have larger research budgets and sales forces. Midsize companies also often find themselves too reliant on one or two drugs, making their sales vulnerable when generic copies of their products are launched. Merck, Serono and Altana are all family-controlled companies that have been seeking merger partners. Nycomed is owned by private-equity firms.

Merck, which isn't affiliated with the American drug maker of the same name, is 73%-controlled by the Merck family of Germany. It has agreed to pay 1,100 Swiss francs ($879) a share for a 64.5% stake in Serono owned by the Bertarelli family of Switzerland, and plans a public tender offer for the shares outstanding at the same price. The offer represents a 20% premium to Wednesday's closing price of 915 francs.

Merck said the deal would transform its pharmaceuticals division, creating a "critical mass in research and development," with a combined total of 28 compounds in development. Merck said it would combine its prescription-drug business with Serono's and call it Merck-Serono Biopharmaceuticals, with global headquarters in Geneva and U.S. headquarters in Boston. Merck-Serono Biopharmaceuticals will have annual sales of €3.6 billion, a research and development budget of €1 billion and 7,000 salespeople world-wide. Merck also sells generic drugs, consumer health-care products, liquid crystals and chemicals. It will continue to manage these businesses separately.

By buying Serono, Merck will gain a larger foothold in the U.S. prescription-drug market, where it has a minimal presence. Serono booked $767 million in sales last year in the U.S., and has a sales and marketing staff of more than 500 people in North America.

Both Merck and Serono have been on the sidelines in recent months after failed attempts to consolidate with other companies. Serono put itself up for sale late last year but didn't seal a deal with any buyers. In April, Serono Chief Executive Ernesto Bertarelli said the company was taking itself off the block and seeking acquisition opportunities instead.

Merck lost a battle with Bayer AG earlier this year for control of fellow German drug company Schering AG. In March, Merck ruled out a bid for Serono. But Merck's chief financial officer, Michael Becker, told analysts on a conference call yesterday that the company changed its mind after a bidding war failed to develop for the Swiss firm. "We were expecting a competition between the big pharma firms with the deep pockets," he said.

Altana, based in Bad Homburg, Germany, is controlled by the Quandt family, which also owns a large stake in BMW AG. The company has been trying to sell its pharmaceutical unit since last year, and the €4.5 billion it accepted from Nycomed is short of the €6 billion it originally sought. Altana has been under pressure since mid-2005, when Pfizer terminated its partnership with the company to jointly develop an experimental respiratory drug.

Nycomed, based in Roskilde, Denmark, sells a variety of drugs for osteoporosis, pain and heart disease.

The need to pool resources and products has motivated other European drug mergers in recent years, including Bayer's $21.3 billion purchase of Schering this year, and Belgium-based UCB SA's $2.7 billion takeover of Celltech Group PLC of the United Kingdom in 2004.

Serono's biggest product is its Rebif treatment for multiple sclerosis, which accounted for 49% of its sales in 2005. Its other main franchise is infertility treatments, with its Gonal-f generating 21% of sales. Merck sells cancer therapies, including the bowel-cancer drug Erbitux, and treatments for cardiovascular diseases and diabetes.

Shares in Merck fell 4.7% to €74.70 in Frankfurt as some investors feared the company was overpaying for Serono. Serono shares rose 18% to 1,076 Swiss francs in Zurich.

Analyst views on the Merck-Serono deal were mixed. Some said the combination appeared to be a sign of desperation for both companies after they failed to find other merger partners.

"The synergies between the two pharmaceutical businesses look minimal, as there is very little product overlap, and even in marketing, the Serono sales force is highly specialized and therefore unsuitable to be used for more general therapeutic areas," Andrew Fellows, an analyst with Helvea, said in a note to clients.

But other analysts said that by combining their research budgets, the companies would improve the chance of discovering new drugs.

Merck said it will finance the deal initially through existing cash and a loan. The all-cash transaction will be refinanced through a combination of a syndicated loan, a bond and a capital increase of €2 billion to €2.5 billion, in which the Merck family will participate with an amount of €1 billion.

Smithfield Foods Agrees To Buy Premium Standard

The nation's largest pork producer, Smithfield Foods Inc. agreed to purchase the country's second-largest producer, Premium Standard Farms Inc., in a deal valued at about $810 million, including the assumption of about $117 million in debt.

Under terms of the deal, each Premium Standard share will be converted into the right to receive 0.678 Smithfield shares plus $1.25 in cash. Smithfield, of Smithfield, Va., said it expects the deal to be accretive to earnings per share upon closing, which is forecast to happen in the first calendar quarter of 2007.

Premium Standard shares ran up sharply late Friday afternoon, suggesting that traders might have caught wind of a possible transaction. Trading volume was triple the average rate, and the company's shares rose 6.8%, or $1.13, as the trading day came to a close.

The deal will solidify Smithfield's lead as the nation's largest hog producer, giving the company nearly 18% of the production market, based on figures contained in a presentation on Premium Standard's Web site. Those figures equal about 1,070,000 hogs during 2005, out of a total industry production figure of about 6,000,000.

Smithfield is also the nation's largest hog processor, though Premium Standard isn't as strong in this area, ranking sixth among all processors.

The deal would seem to present the possibility of an antitrust review, though Smithfield officials are confident the deal will pass muster with authorities. Indeed, antitrust suits and conditions have been relatively rare over the last year, as merging companies have only had to make slight concessions if at all.

Revlon Names David L. Kennedy President and CEO

Revlon, Inc. announced today that its Board of Directors has elected David L. Kennedy as a Director and as President and Chief Executive Officer. He succeeds Jack Stahl, who is leaving the Company to pursue other interests. Mr. Kennedy is currently Revlon's Executive Vice President, Chief Financial Officer and Treasurer. While Mr. Kennedy's appointment is effective immediately, Mr. Stahl has agreed to stay on as an advisor for 30 days to ensure a smooth transition to the new leadership.

Mr. Stahl said, "I've greatly enjoyed my tenure at Revlon, and believe we've laid a strong foundation for future growth at the Company. However, in order to pursue other interests, I've come to the decision that it is time to pass the baton to a new leader. David and I have worked together for twenty years, and I couldn't be leaving the Company in better hands."

Ronald Perelman, Chairman of Revlon's Board, said, "David Kennedy is a talented, experienced executive who, as president of Revlon International, restored meaningful profitability to the international business through aggressive control of costs and strong top-line growth. David steps into his new role with a deep knowledge of Revlon and our industry. We believe he will provide the Company with outstanding leadership as we move to strengthen Revlon's brands, improve performance and build value for shareholders. Jack Stahl has made significant contributions to our Company over the last four years, and we appreciate his tireless efforts."

Mr. Kennedy said, "I believe strongly in Revlon and its future. The Company has a strong product portfolio with exceptional brand equity. While we have a great deal of work to do, I look forward to the opportunity to help Revlon fulfill its tremendous potential."

Mr. Kennedy, 59, joined Revlon in 2002 as Executive Vice President and President of Revlon International. Earlier this year he was appointed Chief Financial Officer of Revlon, Inc. and its wholly owned operating subsidiary, Revlon Consumer Products Corporation.

Mr. Kennedy's 33-year business career includes several senior management and senior financial positions with The Coca-Cola Company and Coca-Cola affiliates, including serving as Managing Director of Coca-Cola Amatil Ltd., a publicly held company based in Australia, and as General Manager of The Coca- Cola Fountain Division. He also served in various key financial positions at Columbia Pictures. A certified public accountant, Mr. Kennedy spent the first eight years of his career at Ernst & Young.

Revlon is a worldwide cosmetics, skin care, fragrance, and personal care products company. The Company's vision is to deliver the promise of beauty through creating and developing the most consumer preferred brands. Websites featuring current product and promotional information can be reached at http://www.revlon.com, http://www.almay.com, http://www.vitalradiance.com and http://www.mitchumman.com. Corporate and investor relations information can be accessed at http://www.revloninc.com. The Company's brands include Revlon®, Almay®, Vital Radiance®, Ultima®, Charlie®, Flex®, and Mitchum®.

John Compton, 45 years old, will take the newly created position of CEO of Pepsi North America, effective immediately. Mr. Compton has worked his entire 23-year career at the food and beverage giant, the bulk of that spent rising through the ranks at the Frito-Lay snack unit where he ultimately served as president and vice chairman. Since 2005, he has been president and CEO of Pepsi's Quaker-Tropicana-Gatorade division.

Chuck Maniscalco, 53, president of the Gatorade/Propel business, succeeds Mr. Compton as leader of the Quaker-Tropicana-Gatorade unit.

Ms. Nooyi, 50, who has served as the Purchase, N.Y., company's president and chief financial officer, will take over as CEO Oct. 1 from Steve Reinemund, who is retiring. Mr. Reinemund, 58, will remain chairman through May 2007.

The new structure will mean fewer division executives reporting to Ms. Nooyi as CEO. Dawn Hudson, president and CEO of Pepsi-Cola North America; Al Carey, president and CEO of Frito-Lay; Tom Greco, president of PepsiCo sales; Ron Parker, senior vice president of human resources and global diversity; and Mr. Maniscalco will all report to Mr. Compton. Mr. Parker will also report to Ms. Nooyi on global diversity.

In a statement, Ms. Nooyi said she chose the new structure to replicate the success of Pepsi's fast-growing international division, where all of the company's food and beverage businesses are consolidated under one executive, Michael White, who is also Pepsi's vice chairman. Mr. White will report to Ms. Nooyi.

"Our individual businesses are headed by extraordinary leaders who are doing an excellent job running their operations, yet there is unquestionably more value to be realized by approaching our consumers and retail partners as a fully integrated enterprise," Ms. Nooyi said.

Bryan Spillane, an analyst at Bank of America Equity Research, said the new management structure should enable Pepsi to better react to changing market conditions. But he cautioned that "given the talent glut at Pepsi, this, as with any organization change, creates the risk that some executives may be dissatisfied with their role."

ConAgra Foods will close Folcroft, Pa., plant plus 4 others

ConAgra Foods Inc. announced plans Thursday to close five manufacturing plants, including one in Pennsylvania, and eliminate about 400 jobs as part of a long-term plan to cut costs.

The closings are part of a reorganization plan the Omaha-based company announced earlier this year. Officials have said previously that as many as 12 plants could be closed as part of the plan.

ConAgra spokesman Chris Kircher said additional plant closings will be announced later. The changes disclosed Thursday will save the company about $50 million in fixed costs annually, which Kircher said is about halfway to the goal of saving about $100 million a year by fiscal 2009.

Two other plants will reduce production, and six will increase production as part of changes over the next 12 to 18 months.

The 400 job losses associated with Thursday's announcement represents the net change in jobs after some plants gain work and others close, Kircher said.

The plants that are closing are in Archbold and Rossford, Ohio; Fort Worth, Texas; Folcroft, Pa., and Laval, Quebec.

ConAgra's tomato paste plant in Helm, Calif., will also operate only on a seasonal basis. Production will increase at the Oakdale, Calif., plant.

The company's Memphis, Tenn., plant will stop producing plastic containers for vegetable oil products. ConAgra will buy containers from a supplier instead.

The company had previously announced plans to build a new plant in Fort Worth as long as local tax incentives are approved. That facility, which will be a regional canning and distribution center, could eventually gain 400 jobs over the current Fort Worth plant, Kircher said.

ConAgra plans to expand its Waterloo, Iowa, pudding plant to handle most of Rossford's pudding production. The plant in Menomonie, Wis., will also increase production.

Kircher said plants in Milton, Pa., and Garner, N.C., will also increase production.

ConAgra's overall restructuring plan involves shifting the company's focus to the brands company officials believe have the most potential, such as Healthy Choice, Chef Boyardee and Egg Beaters. Already this year, the company has sold its refrigerated meats, seafood and cheese businesses.

The businesses ConAgra sold this year have included well-known brands such as Butterball, Cook's, Louis Kemp, Armour, Decker, Ready Crisp and Margherita.

During the past decade, ConAgra has changed from a decentralized conglomerate based in agricultural commodities into a retailer of packaged food with centralized research, sales and administration.

Newell Rubbermaid to sell Little Tikes toys unit

The Atlanta-based company said the deal is expected to close in the fourth quarter, pending regulatory approval and the consultation of trade unions and employee groups in certain affected European countries.

Little Tikes, whose headquarters and largest manufacturing facility are in Hudson in northeast Ohio, makes children's toys, furniture and related items for consumers. It brought in about $250 million in revenue for Newell Rubbermaid in 2005.

It's best known product is the red and yellow Cozy Coupe Car, which celebrated its 25th anniversary in 2004.

Little Tikes was founded in 1970. In 1984 it became a part of Rubbermaid Inc., which in 1999 was acquired by Newell Inc. to become Newell Rubbermaid.

MGA Entertainment, based in Van Nuys, Calif., is a family and children's entertainment company. It makes toys and games, dolls, consumer electronics and sporting goods, among other things.

Newell Rubbermaid in recent years has been restructuring its business, discontinuing or selling some operations so it can focus on others.

The company expects to record a net gain of $15 million to $25 million in the fourth quarter related to the Little Tikes sale. But, as a result of reclassifying Little Tikes as discontinued operations in the third quarter, full-year earnings per share from continuing operations, excluding charges, are expected to decline by 3 cents to 4 cents, Newell Rubbermaid said.

The company said it is still maintaining its third quarter and fiscal year 2006 earnings guidance issued in July.

Shares of Newell Rubbermaid rose $1.64, or 6.1 percent, in trading Monday to close at $28.64 on the New York Stock Exchange.

Clorox Picks A Top Coke Officer As New Leader

Clorox Co., a midsize producer of well-known household products, is reaching outside its ranks for the first time to tap a new leader with big-company experience: Donald R. Knauss, head of Coca-Cola Co.'s largest market.

Clorox, whose brands include Glad trash bags, Brita water filters and Kingsford charcoal as well as its namesake bleach, last night confirmed an online Wall Street Journal article about Mr. Knauss's appointment as chairman and chief executive. Mr. Knauss, 55 years old, will take the helm of the company in early October.

Taking Mr. Knauss's place as Coke's president for North America will be J. Alexander M. "Sandy" Douglas Jr., 45. Mr. Douglas, who joined the company in 1988, is currently chief customer officer. Mr. Douglas ran much of the North American business from 2000 to 2003.

Mr. Knauss will be the first outsider to run Clorox, which is based in Oakland, Calif., and was founded in 1913. His selection comes as Clorox faces rising costs of commodities including oil and chemicals, and intensified competition from much-bigger consumer-products rivals such as Unilever PLC and Procter & Gamble Co.

The selection of Mr. Knauss shows the value Clorox places on big-brand expertise and strong bonds with major retailers. Key Clorox directors also are counting on Mr. Knauss's international experience to help Clorox expand overseas, where it badly lags behind competitors.

Jerry Johnston, Clorox's previous chairman and CEO, retired in May at age 58, two months after a heart attack. Robert Matschullat, an outside director, held the top two posts on an interim basis. Mr. Knauss "has a track record of transforming businesses and accelerating growth," Mr. Matschullat said in an interview.

Mr. Knauss has long been in the mix of senior executives seen as possible successors to Coke's CEO, Neville Isdell. But Coke has said there is no retirement timetable for Mr. Isdell, who is 63. Also, Muhtar Kent, named to run Coke's international business this year, has emerged as an inside front-runner, according to people familiar with the matter. The Coke board also plans to consider external candidates. Mr. Isdell has brought in several key executives in recent years, which should cushion the loss of Mr. Knauss.

In an interview, Mr. Knauss said he was attracted by Clorox's market-leading brands and an ambition to lead a public company. "I wanted to seize the day," he explained. Age 55 "is the perfect time for me to do that." Clorox didn't disclose details of Mr. Knauss's compensation package.

Mr. Knauss brings close ties to retailers, a big asset as retailers trim inventories to stock only top-selling brands. He offered several retail chief executives as personal references -- an unusual move, according to Mr. Wood. Mr. Knauss said he intends to enlist retailers' help in developing innovative Clorox products.

Despite its big brands, Clorox is a niche player in the consolidating household-products sector. Its $4.6 billion in annual sales is dwarfed by P&G's $68.2 billion and Unilever's $49.4 billion. Net income fell 59% to $444 million in the fiscal year ended June 30, reflecting rising raw-material costs and a one-time gain in the prior year.

Clorox faces growing competition in several of its market-leading categories, long ignored by rivals. Clorox's cleaning products, which include the Formula 409, Pine Sol and Tilex lines, face pressure from P&G's expansion of Mr. Clean. Clorox's core bleach products must compete with private-label brands as well as detergents that include bleach, or a substitute.

Mr. Knauss said international markets will "be a key area of focus" during his Clorox tenure. "There's a tremendous amount of growth potential there," he said.

Clorox's brand portfolio makes it a seemingly attractive takeover candidate. But Mr. Knauss said the company could "ward that off" by growing and building partnerships.

A former Marine, Mr. Knauss joined Coke's Minute Maid unit in 1994. He spent nearly two years managing Coke businesses in 10 African countries and was named president of the North American division in 2004.

Since then, the unit has posted five consecutive quarters of sales-volume growth after declines in 2004, when Coke lost market share to PepsiCo Inc. The company has rolled out modest hits such as Coke Zero, a diet cola aimed at young men, but sales of carbonated soft drinks are suffering amid concerns about obesity. North American soda sales were flat and noncarbonated-drink volume grew 7% in the second quarter.

Rite Aid to Acquire
Eckerd, Brooks Chains

Rite Aid Corp., finding its footing several years after a major accounting scandal, confirmed a deal to purchase the Eckerd and Brooks drugstore chains from Jean Coutu Group (PJC) Inc. for about $3.4 billion in cash and stock.

The deal will add about 1,800 stores to Rite Aid's existing 3,300 locations, boosting its efforts to catch up to larger U.S. drugstore rivals Walgreen Co. and CVS Corp. It also would increase Rite Aid's clout along the East Coast, where it already has its strongest markets.

Under the terms of the deal, Rite Aid plans to pay $1.45 billion in cash and the rest in stock. Jean Coutu Group will own about 32% of Rite Aid following the transaction, which also must pass government clearances.

Jean Coutu Group has owned Eckerd for only about two years, after its $2.38 billion purchase of 1,540 stores from J.C. Penney Co. in 2004. But it had trouble integrating Eckerd with its Brooks chain. (CVS purchased a separate 1,260 Eckerd stores from J.C. Penney.) Late last year, Jean Coutu, co-founder of the company, wrested control from his son to try to right the business.

Earlier this month, Quebec-based Jean Coutu Group said it would spend about $58 million in the coming year to renovate its U.S. drugstores, but it wouldn't comment at that time on analysts' predictions that it would sell some locations to reduce its debt.

Rite Aid, based in Camp Hill, Pa., reported sales of $17.3 billion in its fiscal year ended Feb. 26. Walgreen is the nation's largest drugstore chain by revenue, with $42.2 billion in its most recent fiscal year, while CVS is second with $37.0 billion -- but all three chains are racing to grow.

In June, Walgreen agreed to buy the Happy Harry's chain of 76 drugstores, marking Walgreen's largest acquisition since 1986. Walgreen also has been making overtures to purchase independent drugstores. CVS, meanwhile, is digesting its recent acquisition of 701 Sav-On and Osco drugstores from Albertson's Inc.

Over the past few years, Rite Aid has been rebounding from an accounting scandal in which it admitted that it overstated profits by more than $1 billion from 1997 to 1999. The company said it committed a host of wrongs, including manipulating costs and hiding depreciation expenses. Rite Aid's former chairman and chief executive, Martin L. Grass, is serving a seven-year prison sentence for his role in the deception.

Rite Aid's recovery has been bumpy. While its sales have been rising recently, profits have been erratic, it remains laden with debt, and efforts to expand in its existing markets have been costly. In its fiscal first quarter, net income fell 67%, as expenses to open new stores more than offset sales growth.

Word of the potential deal came after the close of New York Stock Exchange composite trading yesterday, in which shares of Rite Aid rose 32 cents, or 7.3%, to $4.68. In after-hours trading, shares rose three cents to $4.71. In Toronto, class A shares of Jean Coutu Group were up 39 Canadian cents, or 3.7%, to C$10.95 (US$9.82).

In the fiscal year ended March 4, Rite Aid reported net income of $1.27 billion, or $1.89 a diluted share, on revenue of $17.3 billion.

Jean Coutu Group reported net earnings for the fiscal year ended May 27 of $103.8 million, or 40 cents a share, on revenue of $11.14 billion.

PepsiCo's names Ms. Indra Nooyi as New CEO

PepsiCo Inc. named Indra Nooyi as chief executive, succeeding Steve Reinemund, the soft-drink and snack-food company said Monday. With the move, Ms. Nooyi becomes one of the most prominent woman in corporate America.

Ms. Nooyi's appointment is effective Oct. 1. Mr. Reinemund said he is stepping down to spend more time with his family.

Ms. Nooyi, 50 years old, joined Purchase, N.Y.-based PepsiCo -- whose brands include Gatorade sports drinks, Frito-Lay snacks, Quaker oatmeal and its namesake cola -- in 1994 and has served as president and chief financial officer for about five years.

"We are exceedingly fortunate to have a leader of Indra's caliber, vision and experience take the helm," presiding director Robert Allen said in a statement. "She has been instrumental to PepsiCo's solid direction and ongoing success and has the complete endorsement and support of the board."

Ms. Nooyi, who was raised in a middle-class family in India, early in her career worked as a corporate strategist at Motorola Inc. and Asea Brown Boveri Inc. After joining Pepsi, she helped spin off Pepsi's restaurant and bottling businesses and worked on the 1998 acquisition of juice maker Tropicana. Then she was lead negotiator on the $13.8 billion acquisition of Quaker Oats Co. in 2001. She was rewarded in May 2001 with a board seat at Pepsi and the additional title of president, putting her in line to succeed Mr. Reinemund someday.

The board had made it clear they didn't want to lose Ms. Nooyi. In 2004, she was one of only two Pepsi executives granted multimillion-dollar restricted stock awards that require them to stay until 2009 to cash in. The other executive to receive the service-based award was Michael White, head of Pepsi's international business. 

In becoming CEO, Ms. Nooyi joins an elite group of woman who lead major U.S. corporations. Earlier this year, Pepsi's Frito Lay North America chief, Irene B. Rosenfeld, was named the new CEO of Kraft Foods Inc. Other companies headed by woman include eBay Inc., Xerox Corp. and Lucent Technologies Inc.

Mr. Reinemund, 58 years old, will serve as executive chairman of PepsiCo and will continue to sit on the board until his retirement next May. He has been with the beverage and food giant for 22 years and spent more than five years as chairman and CEO.

"I have decided that my family is entitled to more time from me than the responsibilities and obligations of continuing as PepsiCo's CEO requires and deserves," said Mr. Reinemund. "It was, in many respects, the toughest and easiest decision of my life."

PepsiCo also said Ms. Nooyi's current responsibilities will be divided between two executives. Richard Goodman, currently CFO of PepsiCo International, will assume the position of CFO for the corporation with responsibility for tax, treasury, control, risk management, and audit and investor relations. And Hugh Johnston, currently senior vice president in charge of transformation, has been promoted to the newly created position of executive vice president, operations, and will add global procurement and information technology to his responsibilities.

Last month, PepsiCo reported a 14% increase in second-quarter profit and raised its full-year earnings outlook, reflecting continued strength from major brands like Gatorade and emerging markets such as Russia. Volume for Pepsi's noncarbonated drinks rose 23% during the quarter, led by Gatorade's 29% growth. That helped offset another sales decline for flagship Pepsi-Cola and the overall soda business slipping 1% by volume.

Shares of PepsiCo, which ranks second to Coca-Cola Co. in the soft-drink market, added 13 cents to end Friday's trading at $63.33.

Aramark Agrees to Buyout By Private-Equity Investors

Food-service provider Aramark Corp. said Tuesday it agreed to a sweetened acquisition offer by an investor group led by its chief executive, a deal valued at $8.3 billion, including $2 billion in debt.

Under the terms of the offer, shareholders of Aramark will receive $33.80 in cash for each share of Aramark common stock they hold. The offer gives shareholders about a 2% premium from Monday's closing price of $33.05.

The offer tops a $32 a share bid in May by the same buyout group. Some shareholders were unsatisfied with the earlier offer and recommended the board pursue a leveraged recapitalization through a large Dutch tender offer. Aramark shares soared back in May when the first buyout offer was made, pushing the company's shares above the offer price.

Aramark shares were down nearly 1% at $32.75 in premarket trading on Inet.

The company said the transaction, if approved, is expected to be completed by late 2006 or early 2007, subject to receipt of stockholder approval and regulatory approvals, as well as satisfaction of other customary closing conditions.

The investor group includes Aramark CEO Joseph Neubauer and investment funds managed by GS Capital Partners, CCMP Capital Advisors and J.P. Morgan Partners, Thomas H. Lee Partners and Warburg Pincus LLC.

"We are proud to partner with this distinguished group of private equity firms, all of which have outstanding reputations and proven records of success," said Mr. Neubauer in a statement. "They are committed to working with us in building long-term solutions that deliver the most value for our clients and customers."

The company said its board, on the unanimous recommendation of a special committee comprised entirely of independent directors, has approved the buyout and will recommend that Aramark stockholders approve the deal.

In May, Mr. Neubauer and the private-equity group proposed taking the firm private in a transaction valuing the company at $5.94 billion, or $32 a share. Aramark, which went public in December 2001, said its board formed a special committee of independent directors to consider the proposal at that time. For its fiscal year ended Sept. 30, the company reported net income of $288.5 million, or $1.53 a share, on sales of $10.96 billion.

Philadelphia-based Aramark said the transaction will be financed through a combination of equity contributed by Mr. Neubauer and investment funds managed by GS Capital Partners, CCMP Capital Advisors and J.P. Morgan Partners, Thomas H. Lee Partners and Warburg Pincus LLC, and debt financing provided by J.P. Morgan Chase Bank., J.P. Morgan Securities Inc. and Goldman Sachs Credit Partners LP.

There is no financing condition to the obligations of the group of investors led by Mr. Neubauer to consummate the transaction.

Credit Suisse Securities is acting as financial adviser to the special committee and Shearman & Sterling LLP is acting as legal advisor to the special committee.

Credit Suisse has delivered a fairness opinion to the special committee. Goldman, Sachs & Co. and J.P. Morgan Securities Inc. are acting as financial advisers to the private equity investors. Simpson Thacher & Bartlett LLP, Sullivan & Cromwell LLP and Wachtell, Lipton, Rosen & Katz are acting as legal advisers to the private equity investors and Mr. Neubauer.