Aramark, best known for providing food service at institutions like prisons and universities, has been a historically sleepy stock, but shares awoke from their slumber today after activist investor Mantle Ridge revealed a 20% stake in the company, worth about $1.8 billion. Paul Hilal, who runs the fund, said he aimed to discuss strategic direction, governance, and the makeup of the board of directors and management team, among other issues.
In a brief statement in response to the news, Aramark said, "Aramark is focused on maximizing long-term value for all of our shareholders, and welcomes open communication and constructive dialogue with our shareholders toward that goal."
News of an activist investor taking a stake in a company often causes shares to spike. It's easy to see why in the case of Aramark. Shares are down since their peak in 2018, and the company seems to have the kind of attributes, including its size, brand/reputation, and relationships with a wide range of institutions, that could combine to form a sustainable competitive advantage.
Hilal likely sees a similar opportunity. The fund manager has said he's not angling for a sale of the food-service giant, but he'll likely agitate for a change in strategy, board seats, or a new management team. Investors should expect more volatility from the stock as Hilal makes his demands clear and Aramark responds.