Compass set to buy French catering firm
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Compass is today expected to announce a Fr4.3bn (pounds 584m) deal to buy the catering business of Accor, one of the world's biggest hotel companies. Under the terms of the deal Accor of France will end up with a 20 per cent stake in Compass, the fast-expanding contract catering group that last year bought Canteen Corporation of America for pounds 312m.
Accor is rapidly selling assets to reduce its mountain of debts, last estimated at Fr23bn. The catering business being sold to Compass trades as Eurest International.
Compass, whose subsidiaries include the rail food outlet Travellers Fare and Roux Fine Dining, confirmed yesterday that it was at an advanced stage of negotiations to buy Eurest, which supplies meals to schools and hospitals throughout France, Germany, Spain and Brazil.
Gerard Pelisson and Paul Dubrule, the heads of Accor, last night sat down with the directors of Compass, which is headed by Francis McKay, to finalise the deal.
Mr McKay, deputy chairman and chief executive, said there would be no public issue of company shares and that the consideration would be made in shares and cash, leaving Accor with a stake in the enlarged company.
Leisure analysts said the acquisition would fit well with Compass's extensive catering portfolio, but that they would be concerned if the company made a rights issue to help fund the deal.Compass shares fell 27p to 345p.
Compass, spun off from Grand Metropolitan, made its market debut at an adjusted 100p in 1988.
The strategy is to create a portfolio of franchised and owned brands such as Burger King, Pizza Hut and Dixie's Donuts as well as the sandwich shop Upper Crust.
Turnover for the group jumped from pounds 497m in 1993 to pounds 917m in 1994, boosted by a 95 per cent rise in turnover in its catering division. Profit for the same year jumped 34 per cent to pounds 55.7m.
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