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Compass seeks equity buyer for SSP arm

17 February 2006

Compass Group has eliminated the final trade buyer from the race to buy its SSP travel concession business.

Italian roadside group Autogrill was cut from the shortlist of six on Monday, and a Compass spokesman said it was now "in due diligence with three or four private equity groups".

The catering giant also revealed that French caterer Elior had been eliminated from the bidding at an earlier stage and is not tabling a joint bid with a private equity player.

Dresdner Kleinwort Wasserstein analyst Karl Green said the decision to exclude trade buyers might be linked to a purchasing clause in the deal which ties the buyer into an agreement with Compass's purchasing arm, Servita.

"The clause would have been a stumbling block for trade players," he said.

Compass also denied that SSP's price tag was as high as the reported £1.4b. "We are looking at a range of between £900m and £1.2b," said the spokesman.

Tony Horton, managing director of consultancy Tricon, criticised Compass's decision. "Private equity groups have not got a good track record in the sector - just look at Welcome Break and Roadchef. They want to cash in rather than provide a quality service," he said.

By Tom Bill

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