Compass sells major foodservice arm
the sale of its core contract foodservice business to an investment
consortium headed by Macquarie Bank.
The group, with annual foodservice revenues in excess in excess of £12bn, will sell the Select Services Partner (SSP) business, the Moto UK motorway food business and American Creative Host Services to Macquarie bank. The remainder of SSP businesses will go to investment firm EQT and other sponsors.
Together, the sales will fetch £1.8bn, beating analyst predictions of between £1.2bn and £1.4bn. The figure is 16 times SSP's 2005 operating profit before goodwill amortisation (EBITA) and represents a major windfall for the firm.
But today Moody's ratings firm confirmed the outlook remains negative for Compass, due to its continuing weak operating performance and its troubles in stabilising operating margin.
The ongoing investigations involving Compass and UN contracting procedures has also contributed to the negative assessment of the group.
The ratings firm said the expectation is also based on the premise that "future acquisition activity will remain limited in size and scope over the intermediate term," as the company disposes of considerable debt repayments.
In addition to the sale of SSP, Compass has also offloaded 90 per cent of its European Inflight catering business, bringing total proceeds to nearly £1.9bn.
The company reiterated plans to buy out the remaining 51 per cent of US-based Levy Restaurants, and will direct £143mn from the sale to this end.
And in a statement the firm said it will direct £500mn of the proceeds to its shareholders through a 12 to 18 month share buy-back programme. And a further £275mn will added to the company's UK pension plans.
Compass finance director Andrew Martin said: "With regard to the proceeds from the sale, we have sought to balance a return of capital to our shareholders, a reduction in our pension deficit, investment in the business and repayment of debt to maintain the strength of our balance sheet.
"Completion of the sale enables us to focus on the core contract catering and support services business, and to exploit the significant organic growth opportunity from a strong financial base."
