Compass sells roadside and travel catering businesses for £1.82b

10 April 2006 by
Compass sells roadside and travel catering businesses for £1.82b

Compass has sold its roadside and travel catering businesses for a combined £1.82b, nearly one-third more than predicted by analysts.

The two-pronged deals will complete in June if Compass gets the green light from European and US anti-trust bodies, along with the approval of shareholders.

"Completion of the sale enables us to focus on the core contract catering and support services business, and to support the significant organic growth opportunity from a strong financial base," said Compass finance director Andrew Martin.

The transaction includes the sale of 43 Moto motorway service areas to Australia's Macquarie Bank for an estimated £600m.

Compass's Select Service Partners (SSP) travel concessions business goes to companies controlled by private equity firm EQT, which is owned by Sweden's Wallenbach family, for an estimated £1.2b.

Compass has also completed the management buyout of a 90% stake its European Inflight catering business for £57m.

Macquarie Bank is a leading infrastructure investor with interests in the UK's A1-M1 link road, the M6 toll road, and Bristol and Birmingham airports.

SSP operates more than 2,000 catering and retail sites in more than 600 railway, roadside and airport sites in 26 countries, mostly in the UK, Continental Europe and the USA. Compass will retain the Japanese and Portuguese operations.

The SSP sale includes Creative Host Services in the USA, which was not part of the original auction.

SSP includes such brands as Upper Crust, Café Ritazza, Harry Ramsden's and Millies Cookies, which Compass will continue to use under franchise in offices and universities.

Compass intends to use the proceeds to return £500m to shareholders, reduce net debts of £2.3b, inject £275m into its UK pension plan, and buy out its remaining 51% stake in Levy Restaurants of the USA for $250m (£143m).

"Compass secured a very good price for the business, above market expectations of £1.3b to £1.4b," said Karl Green, analyst at Dresdner Kleinwort Wasserstein. "It's symptomatic of the huge wad of private equity money out there looking for a home - it's a sellers market."

"Compass is disposing of its proceeds - which come to a net £1.7b - quite sensibly. All round it is a good outcome and Compass can now focus on the challenges facing its core business, such as falling subsidies, rising competition and food-quality issues."

By Angela Frewin

Get your copy of Caterer and Hotelkeeper every week - click here to subscribe and save 25%.

Sudoku Join the craze and play Sudoku online!
The Caterer Breakfast Briefing Email

Start the working day with The Caterer’s free breakfast briefing email

Sign Up and manage your preferences below

Check mark icon
Thank you

You have successfully signed up for the Caterer Breakfast Briefing Email and will hear from us soon!

Jacobs Media is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.


Ad Blocker detected

We have noticed you are using an adblocker and – although we support freedom of choice – we would like to ask you to enable ads on our site. They are an important revenue source which supports free access of our website's content, especially during the COVID-19 crisis.

trade tracker pixel tracking