08:54 AM EDT, 09/27/2024 (MT Newswires) -- Aramark's ( ARMK ) potential merger with French food caterer Sodexo may create a top global food and facilities firm in terms of revenue but antitrust risks and other issues make a tie-up unlikely, Truist Securities said in a note Friday.

Citing a Bloomberg report about Sodexo exploring a potential bid for Aramark ( ARMK ), Truist said a transaction would face antitrust scrutiny in Europe and the US, limit potential returns given Aramark's ( ARMK ) valuation premium to Sodexo, and require "significant" equity financing that would dilute the Bellon family's control of the combined company.

"We don't see a sale as the only way to create shareholder value here," analyst Jasper Bibb said in the note. "Additionally, both companies operate global supply chains and could be at risk of dis-synergies if overlapping customers opted to diversify away from a single larger provider."

Truist Securities maintained its buy rating and a $42 price target on Aramark ( ARMK ) stock.

Price: 39.34, Change: +0.99, Percent Change: +2.58