Compass shares soar as caterer lifts guidance and reveals record takeover
The €1.5billion (£1.3billion) takeover of Dutch foodservice operator Vermaat, Compass's largest ever deal, is part of the group's plans for European expansion after decades of acquisition-led growth in North America.
Compass, which caters to staff and students at Microsoft, Shell and Harvard Business School, has been ramping up M&A activity since its Covid-era slump.
The firm, which lifted annual guidance on Tuesday after better-than-forecast growth in its third quarter, said Vermaat offers the group a 'unique opportunity for further sustainable growth in Europe'
Vermaat, a market leader in the Netherlands with a growing presence in Germany and France, has delivered a compound annual growth rate of nearly 20 per cent over the last 15 years, and is on track to generate sales of €700million in 2025.
Compass boss Dominic Blakemore said: 'This strategic acquisition represents a step change in our core markets by creating a strong platform for expansion across Europe.'
It came as Compass raised its annual profit forecast after reporting revenue growth of 8.6 per cent for the three months to the end of June.
International sales rose 6.6 per cent during the quarter while its largest market, the US, grew by 9.6 per cent.
Compass Group shares led the FTSE 100 on Tuesday, adding 5 per cent to 2,651p by midmorning.
They have now added more than 20 per cent over the last 12 months and around 130 per cent over the last five years.
Adam Vettese, market analyst at eToro, said: The company's combination of robust underlying growth and successful recent acquisitions demonstrates strategic discipline and supports Compass as a leader in outsourced catering.
'However, the sizeable €1.5 billion price tag for Vermaat means the balance sheet leverage will tick higher, adding some financial risk and making integration a key focus in the months ahead.
'Overall, with resilient industry trends and a strong track record of delivering on M&A, Compass is well placed to capture further market share.
'But with a more ambitious acquisition strategy, some caution is warranted around execution and debt, particularly as its current valuation leaves little room for indigestion.'
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