Compass pays £120m for US healthcare operation

The world's largest catering company Compass Group yesterday unveiled plans to pay $170m (£120m) in cash for Crothall Services Group, a US-based hospital services company, and said it was looking for more bolt-on acquisitions.

Michael Bailey, the chief executive, dismissed fears Compass was expanding in the US as the economy turns down. He said that although the company has seen a slowdown in America, "military and healthcare are doing very well".

Crothall, which specialises in housekeeping, portering and laundry services for hospitals in the US and Canada, employs 8,500 staff and is the industry leader with more than 9 per cent of the market.

One analyst, who asked not to be named, said he thought the deal was slightly out of kilter with the group's core business.

Mr Bailey said Crothall was a good fit with Compass's catering operations as increasingly the US healthcare market is requesting a "one-stop" service requiring food and other services for hospitals.

Compass has spent £1.3bn on acquisitions in the past nine months including Morrison Management Specialists, which caters for US hospitals, and more purchases are expected. "They will be steady, solid, bolt-on acquisitions," said Mr Bailey.