LONDON Compass Group PLC, the world’s largest contract caterer and facilities management specialist, said it has agreed to sell its 22-nation Selecta European vending business to Allianz Capital Partners, a private-equity firm, for about $1.53 billion. —
The deal is expected to close in July. —
Following the completion of the sale, Compass said it would return $990.9 million of the sale price to shareholders through an 18-month share buyback program, and put $89 million into its pension program, with the remainder used to pay off debt. Selecta’s operating profit last year was about $93.1 million on $993 million in revenue. —
The planned sale of Selecta, which was announced May 15, marks the latest in a line of divestitures carried out over the past 18 months. The company last year sold elements of its Restaurant Associates/Patina Group fine-dining subsidiary. The buyers were former RA chief executive Nick Valenti, Patina founder and chef Joachim Splichal, and Shidax Corp., a Tokyo-based foodservice operator. The deal was valued at $90 million. —
Compass also sold Select Service Partners, its European travel concessions arm, for $3.2 billion to private-equity firm EQT Partners. In addition, in 2005, it sold a 75-percent stake in Boston-based Au Bon Pain, the fast-casual bakery-cafe concept, to management for about $90 million. —
These divestitures, which followed a series of financial difficulties in 2005, are a result of Compass’ strategy to simplify the organization and focus on its core contract catering business, said Richard Cousins, the company’s chief executive. —
For the six months ended March 31, Compass reported that its net profits rose 41 percent, to $392 million, up from $277.7 million in the same period a year earlier. —
Despite the increase in profits, revenue for the company decreased approximately 1.7 percent, to $10.3 billion, from $10.47 billion in the same period a year ago. —
At Compass’ North American division, revenues decreased 4 percent, to $4.23 billion, from $4.41 billion in the same period a year ago. Despite the decrease, which was driven mainly by the divestitures, the company said the division posted “good organic growth of 7 percent,” which refers to expansion through increasing output and sales as opposed to mergers and acquisitions. —
The company further stated that its Chartwells education division saw revenue growth of 9 percent and its health care foodservice division experienced an increase of 7 percent. At its Levy Restaurants sports and entertainment division, revenue growth was up 9 percent as well. But sales at Canteen, the company’s vending arm, had declined by an undisclosed amount. —
Overall, though, company chairman Roy Gardner said he was pleased with Compass’s latest results. —
“This is a very encouraging set of results, with a number of actions and initiatives introduced over the last six to nine months contributing to the improved performance in many parts of the business,” he said. —
Gardner said he anticipates a continued positive performance for the rest of the fiscal year. —
“Looking ahead to the full year,” he said, “we expect to see a continuation of the underlying performance seen in the first half.” —
Cousins said Compass’ improved performance is related to the business’ better management approach. —
“We have exceeded our expectations in the first half of the year,” Cousins said. “This positive trend is being achieved due to the underlying quality of the business combined with the introduction of a more transparent and intense management approach…coupled with much more focus on driving revenue growth and more emphasis on cost management and cash control. [That] framework is helping us to be more selective about the new business we take on and more disciplined in the investment of capital.” —
The company reported total revenues exceeding $22 billion in 2006, $6.6 billion of which comes from its U.S. division. Its current market valuation is estimated at approximately $12 billion. —