Food service company, Compass Group, has signed an agreement to acquire CH&CO, a provider of premium contract and hospitality services in the UK and Ireland, for £475m.

The transaction, which remains subject to regulatory approval, is worth an initial enterprise value of £475m with an additional earn out over the two years following closing, dependent on the profit growth of the business.

CH&CO delivers a bespoke food offering through several sector brands and the company currently generates annual revenues of £450m, operating across a range of sectors, including business, sports and leisure, education, and healthcare.

Compass Group suggested that CH&CO has a “diverse client base” and “broad geographic spread” which can complement its own existing footprint in the UK and Ireland.

Group CEO of Compass Group, Dominic Blakemore, added: “The proposed acquisition is in line with our longstanding strategy to create value through disciplined capital allocation.

“Our strong cash generation and balance sheet give us the flexibility to invest in organic growth and to acquire high quality businesses with exceptional management teams, enabling us to further accelerate growth and enhance shareholder returns.”

CH&CO CEO, Bill Toner, said: “Both businesses have strong and complementary brands, and subject to regulatory approval, there is a great opportunity for us to learn from each other and to build an even more exciting future together.”

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