Compass Granada buying clout will save £50m

Combining the purchasing power of Granada and Compass will create savings of about £50m, Compass Group chief executive Mike Bailey said today.

A further £20m would be saved by bringing together other departments of the two companies, he told an audience of caterers and suppliers.

Bailey was speaking at a lunch at the Savoy hotel in London organised by industry association Arena. The Compass Granada merger took effect today.

Asked from the floor whether there were any barriers to further expansion, Bailey said there was no reason the company could not become "significantly larger".

He said: "As Compass Granada we represent only 3% of the global food service market. Just look at Ford and General Motors. They have 35% of the motor car industry."

Bailey added that further growth would come from a combination of acquisitions and developing from scratch but there were no plans to buy any more companies in the UK.

Germany and the USA were the countries with the most growth potential.

Addressing the rumours that Rocco Forte might be interested in re-acquiring the Forte name, Bailey said: "There have been no approaches. He hasn't called me."

The make up of the new board at Compass Granada is expected to be announced tomorrow.

Casualties in some areas would be inevitable, said Bailey. But he claimed the merged companies would create around 15,000 new jobs worldwide in the next 12 months.