Compass buys caterer CH&CO for $600 million in its biggest European deal to date

By Yadarisa Shabong

(Reuters) -British catering company Compass Group on Monday agreed to buy rival CH&CO in a deal valuing the Royal Opera House caterer at 475 million pounds ($603.73 million), including debt, marking its biggest acquisition in Europe to date.

Compass, the world’s largest catering group, has been looking to make bolt-on acquisitions as it bounces back from the pandemic.

CH&CO, backed by private equity group Equistone, provides catering services to businesses, universities, sports and other events. Some of the venues it serves include London’s Royal Opera House, Abbey Road Studios and the Royal Botanic Gardens at Kew in London.

Compass CEO Dominic Blakemore said in a statement that CH&CO’s strong brand identity would enable the company to capitalise on the significant growth potential in the market.

“We can imagine potentially stronger margin dynamics in FY23 and we would expect clear synergy upside following integration with Compass,” Barclays analysts wrote in a note.

“There has been a bit of a drag to EPS forecasting not knowing how cash will be spent this year so the announcement of this deal will help to provide some clarity,” they said.

There is an additional earn-out over two years after the deal closes, depending on the profit growth of the business, Compass said.

CH&CO Chief Executive Bill Toner said joining Compass Group “offers huge potential” for its clients.

Reading-based CH&CO has more than 900 clients across 1,000 locations and currently generates annual revenue of about 450 million pounds.

It owns brands such as Gather & Gather, Vacherin and Company of Cooks.

Compass, which operates in more than 30 countries, bought Nordic caterer Fazer Food Services in 2019 for an enterprise value of about 475 million euros ($517.23 million).

($1 = 0.7868 pounds)

($1 = 0.9184 euros)

(Reporting by Yadarisa Shabong in Bengaluru; Editing by Sherry Jacob-Phillips, Subhranshu Sahu and Jane Merriman)