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Morning Briefing for pub, restaurant and food wervice operators

Mon 19th Aug 2019 - CH&CO buys Mitie’s Gather & Gather business for up to £85m
CH&CO buys Mitie’s Gather & Gather business for up to £85m: Mitie Group has entered into an agreement to sell its Gather & Gather catering and hospitality business for a consideration of up to £85 million in cash (on a debt-free, cash-free basis). As part of the deal, Mitie and CH&CO will enter into a strategic partnership ensuring that the Gather & Gather catering offer remains exclusive to Mitie’s clients. The company stated: “The decision to sell Mitie Catering follows a strategic review of Mitie’s business, focusing in particular on how to ensure that Mitie’s clients benefit from the very best in catering choice and competitive pricing. This concluded that Mitie Catering’s long-term future would be better served by being part of a larger specialist catering group, rather than being self-delivered by Mitie. As a Royal Warrant holder for the provision of catering services to Her Majesty The Queen and other prestigious clients, CH&CO possesses the expertise and scale to enhance the range of catering services that Mitie provides. The staff and senior management team of Mitie Catering, including managing director, Allister Richards, will transfer to CH&CO and will continue to run the business. Whilst Catering services will remain an important part of Mitie’s service offering to its customers, under the strategic partnership with CH&CO, Mitie will no longer be self-delivering this service. Mitie already works with a number of expert partners to deliver other specialist services, ensuring that service quality and innovation are maintained for its customers. This disposal continues Mitie’s strategy of focusing and simplifying the group’s operations. The proceeds of the sale will be used to further strengthen Mitie’s balance sheet and reinvest in Mitie’s core business.” Phil Bentley, chief executive, Mitie Group, said: “Mitie’s strategy is to invest in our core technology-led facilities management services – such as security, cleaning and engineering services – where we have a leading market position. Gather & Gather is a niche player in the £4 billion UK contract catering market. By teaming up with CH&CO at this time, we believe this ensures the best choice and competitive pricing for our clients, whilst releasing funds for reinvestment and strengthening our balance sheet. The Gather & Gather management team will continue to lead the business and we look forward to working with them on delivering their unique offering to our existing clients and on future IFM opportunities.” Mitie Catering is a leader in contemporary contract workplace dining, hospitality and event catering services in the UK and Ireland, employing over 3,600 people at over 330 sites across the UK and Ireland. Bill Toner, chief executive, CH&CO, said: “This acquisition is a key part of our growth strategy and represents a great opportunity for Mitie, Gather & Gather and CH&CO. We are very excited about the future growth potential for our business in our strategic partnership with Mitie – we bring scale and catering expertise; Mitie brings an extensive client list and innovation, and we both share a reputation for great customer service. The sharing of best practice will drive an even better service for our clients, and the enlarged CH&CO group creates unparalleled opportunities for growth.” The Consideration comprises an initial consideration of £73m payable in cash at completion, and a deferred consideration of up to £12m. Half of the deferred consideration of £12m is payable within 12 months of completion and half is payable within four years of completion subject to the achievement of certain performance milestones. For the financial year ended 31 March 2019, Mitie Catering reported audited revenues of £136.1m and operating profit before other items of £5.2m. The operating profit contribution before other items and internal group recharges of Mitie was £8.3m for the same period. CH&CO will report annual revenues of nearly £300m for financial year ending 31 December 2018.

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