Compass Group agrees takeover of Royal Opera House caterer

Compass Group has agreed to buy rival CH&CO, which provides catering services to the Royal Opera House, for £475million. 

The world’s largest catering company said CH&CO has a ‘long track record of strong performance’, and a client base and geographic spread that would complement its British Isles operations.

Headquartered in Reading, Berkshire, CH&CO supplies catering to an extensive range of industries, such as education, healthcare, and sports and leisure, and has possessed a Royal Warrant since 2013.

Its clients comprise prominent cultural institutions, including the Royal Opera House, Kew Gardens, the Old Royal Naval College, and Historic Royal Palaces, a charity that manages Hampton Court Palace and the Tower of London.

CH&CO’s acquisition is set to provide a significant windfall for Equistone, a European private equity company which has backed the catering group since 2019.

Since Equistone came on board, CH&CO has taken over multiple businesses, such as Vacherin, Blue Apple, Pabulum, and Gather & Gather from outsourcing firm Mitie.

Dominic Blakemore, chief executive of Compass, said the proposed takeover of CH&CO ‘combines the best of the two companies: our shared passion for people, great food, and focus on sustainability’.

He added: ‘With CH&CO’s strong brand identity and a broad geographic reach, we would be able to further enhance our customer proposition, helping us capitalise on the significant growth potential in the market.’

Blue-chip listed Compass operates in around 35 countries, serving food and drinks to an array of education, defence, healthcare and sporting facilities.

In its latest annual results, Compass reported statutory sales jumped by 21.6 per cent to £31billion while pre-tax profits expanded by 19.2 per cent to £1.75billion.

The London-based group signed a record £2.7billion of new business contracts over the period on the back of robust trading across all markets.

Following the solid result, it announced a 27 per cent hike in its final dividend and another share buyback worth up to $500million (£410million).

For the 2024 financial year, Compass anticipates ‘high single-digit’ organic turnover growth alongside a 13 per cent increase in underlying operating profits.

Bill Toner, chief executive of CH&Co, said: ‘The prospect of joining a leading global provider of food services offers huge potential for us and our clients.

‘Creativity and innovation are skills that we share with Compass, and food is at the heart of everything we do.’

Compass Group shares were 0.1 per cent lower at £21.67 on early Monday afternoon, but have still grown by around 13 per cent over the past 12 months.