Compass agrees to pounds 120m takeover of US catering firm

Compass Group, the fast-growing international contract catering group, yesterday enhanced its position in the US through an agreed $195m (pounds 120m) takeover of Daka International.

Daka is a quoted company which provides contract meals and vending facilities for schools and colleges, factories and offices in 34 states in America.

The cash payment includes $110m worth of debt, which Compass will assume. Compass does not envisage any problem is gaining the necessary approval of two-thirds of Daka's shareholders, and envisages the deal will be completed by the end of next month.

Allen Maxwell the president and chief executive of Daka, will join the board of the Compass division in the US.

Daka has been in business for more than 20 years and has 710 catering contracts in 34 states. It also owns two retail restaurant businesses, Champps and Fuddruckers, which are being demerged to Daka's existing shareholders and are not included in the deal with Compass.

The businesses that Compass is buying had turnover of $280m and yielded operating profits of $17.5m last year. The acquisition is expected to be earnings neutral for Compass this year and earnings enhancing next year, Roger Matthews, the group managing director, said.

Compass is already established in the US market through Chartwells, its specialist supplier to UK schools and colleges, and through Professional Foodservice Management, which was acquired in August last year.

The latest acquisition will enhance Compass' existing buying power in the US and increase its clout in bidding for new contracts in a business where size, experience and proven ability to cater for special needs at a keen price are all important.

Almost three quarters of the Daka turnover is in the education sector. This means that once it is on board it will more than double Compass's turnover in the education market and confirm it as number four, possibly number three, in the US market.

The total US market for contract catering is worth an estimated $21bn, about 70 per cent of which comes from schools and colleges, said Mike Bailey, the chief executive officer of the US division of Compass.

Earlier this month Compass reported an 18 per cent growth in profits world-wide to pounds 56m on a turnover of pounds 1.17bn, including profits of pounds 17.8m in the US, and the group narrowly failed to enter the FTSE 100 index at the last quarterly review in March. Compass shares were up 0.5p to 675p yesterday, valuing the group at pounds 2.17bn.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive + incentives + uncapped comms: SThree:...

Recruitment Genius: Telesales Executive - OTE £25,000

£13000 - £25000 per annum: Recruitment Genius: Would you like to be part of a ...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Are you passionate about sale...

Ashdown Group: Graduate Developer (Trainee) - City, London

£25000 per annum + benefits: Ashdown Group: A large financial services company...

Day In a Page

The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory
Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

Cook not the only one to be caught in The Oval mindwarp

Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

Can Benitez get the best out of Bale?

Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

Beijing witnesses new stage in the Jess and Kat rivalry

The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

Jeremy Corbyn interview: A shrewd operator desperate for power

His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

Isis executes Palmyra antiquities chief

Robert Fisk on the defender of the ancient city's past who was killed for protecting its future