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Brit Food Giant to Sell Travel Properties

April 10, 2006|From Times Wire Services

LONDON — Britain's Compass Group, the world's largest food service company, said Sunday that it had agreed to sell its airport and railway food concessions and other travel properties to an investor group for $3.2 billion.

The sale of the unit, which operates in 26 countries, is part of Compass' move to focus on its core business and restore investor confidence.

Chertsey, England-based Compass said it would use the money to buy back stock, contribute to its British pension plans, reduce debt and complete a previously announced deal to buy the remaining 51% of Chicago-based Levy Restaurants. Compass already owns 49% of Levy, one of the largest food service operators at U.S. sports and entertainment venues, including Dodger Stadium.

EQT Partners, a private equity business controlled by Sweden's billionaire Wallenberg family, will buy the airport and railway food operations of Compass' Select Service Partner unit. Sydney, Australia-based Macquarie Bank and partners will buy the British motorway services unit of SSP.

"Completion of the sale enables us to focus on the core contract catering and support services business and to exploit the significant organic growth opportunity from a strong financial base," Finance Director Andrew Martin said. The deal is expected to be completed in June, subject to shareholder approval.

Compass has been struggling lately. The company cut profit forecasts four times in the 12 months starting in September 2004, and Chairman Francis Mackay and Chief Executive Mike Bailey plan to quit this year. Earnings were hurt by the loss of contracts to serve troops in the Middle East, as the U.S. and Britain scaled back their forces there.

Compass operates restaurants and other food service businesses in more than 90 countries. Its holdings include such famous names as Patina restaurant in Los Angeles.

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