Wall Street analyst John Rohs did a study last year in which he concluded that Saga Corp., a California restaurant and food-services company, was an attractive takeover target for a price of about $34 a share.
Was someone at Marriott Corp. paying attention? "Well, Marriott did request a copy of the piece," Rohs, an analyst at Wertheim & Co., said yesterday.
Whether Rohs' study affected Marriott's decision to make an unsolicited $435 million offer for Saga on Wednesday -- $34 a share for the company's 12.8 million outstanding shares -- is open to question. But analysts agree that the union of Marriott and Saga would be a near-perfect blend, particularly in the contract food-services business. "I think it's a dynamite marriage," said Rohs. "The businesses fit very well."
Market analysts said yesterday they were not surprised by Marriott's offer to buy Saga because Marriott, which is based in Bethesda, last year nearly tripled the size of its food-service management operations by acquiring two other food operations -- Service Systems and Gladieux.
Marriott's lodging market cannot keep growing forever, analysts said, and of the contract food-service companies, only Saga and ARA Services of Philadelphia are larger than Marriott.
Top executives of ARA Services, the world's largest food-services company, took the company private in 1984 through a leveraged buyout. That left Saga the only logical choice for an acquisition by Marriott, analysts said.
"One of the few food-service companies larger than Marriott is Saga . . . . And in this business, size matters," said James M. Meyer, an analyst with Janney, Montgomery, Scott. "Clearly, Marriott can boost Saga's earnings because some duplicate services can be done away with."
In 1985, Marriott's contract food-service operations represented 37 percent of the food and lodging company's total sales of more than $4 billion. Marriott provides food services for airlines and airports, as well as for businesses, educational institutions and health-care organizations.
Saga, with $1.3 billion in annual sales, is a major provider of contract food services to colleges and universities, corporations and acute-care hospitals, with about 950 accounts. The company also owns and operates 550 restaurants. Saga's 1985 profits were $22.5 million, down 34 percent from the previous year, which the company attributed to weakness in its restaurant division.
The consensus among experts yesterday was that Marriott's interest in Saga clearly is not for the company's restaurants, which include Straw Hat Pizza parlors, Black Angus Cattle Co. and Velvet Turtle restaurants. The company operates a Velvet Turtle restaurant in Crystal City on a contractual basis.
"They might keep parts of the restaurant group, but probably not all of it," said Joseph Doyle, of Smith Barney.
One aspect of Marriott's offer all the analysts agreed on: It is too low. "Marriott's got to pay more or somebody else will," said Meyer, pointing out that Saga was trading above Marriott's offer yesterday. "Saga's in play. It's going to disappear, but probably not to Marriott right now."
Saga closed yesterday at 36 5/8, up 7 1/8 on volume of 2.7 million shares. Marriott closed at 169 1/4, up 3/4 on volume of 78,800.
Neither Saga nor Marriott officials would comment on Marriott's offer yesterday. Saga's board of directors is scheduled to meet today to consider it.