£1bn pay-out for Compass shareholders in UK
Shareholders in the world’s largest catering group Compass are to receive a £1bn (€1.5bn) pay-out following the sale of the company’s European vending business, it emerged today.
Compass sold its Selecta business to German private equity group Allianz Capital Partners for £772.5m (€1.1bn) and said that, following the deal, it would return £500m (€732m) of the proceeds to shareholders through a share buy-back programme over the next 12 to 18 months.
This comes on top of a previously announced return of £500m (€732m), which followed the sale of the firm’s travel services business Select Services Partner and Moto in 2006, taking the total buy-back to £1bn (€1.5bn).
Compass, which is based in Chertsey, Surrey, will also make a special contribution of £45m (€66m) into its UK pension funds, and will use the remaining cash to reduce the group’s net debt.
Selecta is Europe’s biggest food vending machine operator with around 150,000 vending machines in 22 countries. Last year it recorded operating profits of £47m (€69m) on turnover of £482m (€706m).
Allianz Capital outbid the UK private equity group Terra Firma run by Guy Hands for the business.
This the second major deal that Terra Firma has missed out on in the last month after its unsuccessful attempt to outbid Kohlberg Kravis Roberts and Stefano Pessina for Alliance Boots.
The sale of Selecta comes as part of Compass’s strategy to rebuild its fortunes after a series of profits warnings and an investigation by the United Nations into allegations regarding its contractual arrangements.
Compass chief executive Richard Cousins said: “This is a good outcome for Compass, further helping to focus on our core catering and support services business.”
Compass, which supplies school meals to children and other contract catering as well as support services, is set to report half year results next week.
The figures should reveal a solid performance after the company said in March that trading in the first five months of the year had been ahead of expectations.
