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MITIE Group PLC

Sale of Catering to new strategic partner CH&CO

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RNS Number : 4530J
MITIE Group PLC
19 August 2019
 

LEI number: 213800MTCLTKEHWZMJ03

Mitie Group plc

19 August 2019

 

 

This announcement contains inside information

 

Mitie sells Catering business and enters into strategic partnership with CH&CO

 

Mitie Group plc (LSE: MTO) ("Mitie" or "the Group") today announces it has entered into an agreement to sell its catering and hospitality business ("Mitie Catering") to CH&CO ("CH&CO") for a consideration of up to £85 million in cash (on a debt-free, cash-free basis) (the "Consideration").  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 as its only Integrated Facilities Management ("IFM") sector partner.

 

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 IFM 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 Officer, Mitie Group plc, commented: 

 

"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 Officer, CH&CO, commented:                

 

"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 transaction will be structured as a sale of the entire issued share capital of Mitie Catering Services Limited, the catering business assets of Mitie Facilities Management Limited in Ireland, together trading under the name Gather & Gather ("Gather & Gather"), along with the entire issued share capital of Creativevents Limited ("Creativevents").

 

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.

 

The sale of Mitie Catering constitutes a Class 2 transaction for the purposes of the UK Financial Conduct Authority's Listing Rules and is expected to complete in early September.  As at 31 March 2019, Mitie Catering had aggregate profits before tax of £4.1m and gross assets of £57.5m.

 

- Ends -

 

For further information, contact: 

 

Claire Lovegrove

Head of Media Relations

M: +44 (0)790 027 6400

E: [email protected]

 




 

Anna Gavrilova

Head of Investor Relations 

M: +44 (0)738 443 9112

E: [email protected]





 

Peter Dickinson 

General Counsel and Company Secretary 

E: [email protected]

 




1.   Numbers are based on the aggregation of audited and unaudited statutory accounts as well as management information in respect of the selected assets and undertakings to be transferred as part of Mitie Catering.

2.   In October 2018, research by Mintel into the facilities management market showed the contract catering market grew to £3.91 billion.

 

About Mitie Catering

 

Mitie Catering is a leading workplace dining, hospitality and event catering services provider in the UK and Ireland, employing over 3,600 people in over 330 sites.

 

Under Mitie's ownership Mitie Catering has delivered solid growth and positioned itself as a key challenger in the UK and Ireland workplace catering market with a distinctive proposition built around the concept of connecting customers to on-trend food and drink, a market-leading wellness programme and an award-winning suite of technology. Through the preferred supplier arrangement, Mitie's Integrated FM clients will continue to enjoy the G&G experience.

 

About Mitie Group plc

 

Founded in 1987, Mitie is the UK's leading facilities management and professional services company. It offers a range of specialist services including Engineering Services, Security, Professional Services, Cleaning & Environmental Services, and Care & Custody.

 

Mitie employs 52,500 people across the country, looking after a large, diverse, blue-chip customer base, from banks and retailers, to hospitals, schools and government offices. It takes care of its customers' people and buildings, by delivering the basics brilliantly and by deploying advanced technology. It is pioneering the Connected Workspace, using smart analytics to provide valuable insight and deliver efficiencies to create outstanding work environments for customers. 

 

About CH&CO

 

CH&CO creates uplifting catering and hospitality experiences across many locations, including workplaces, destinations, venues, events, education, livery and healthcare.

 

Food has the power to make people feel good, and that goes beyond what's on the plate. Great food experiences lift the spirit, bring people together and fuel emotional positivity and physical wellbeing. This is CH&CO's motivation across its areas of expertise, which includes event catering, workplace cafés and restaurants, corporate fine dining and hospitality, visitor attraction catering, pupil and staff feeding at state and independent schools, university cafés and restaurants, hospital staff and visitor restaurants, hospices, Livery Hall catering, venue sales, event management and production, and reception and concierge services. Its chefs and nutritionists challenge themselves to push the boundaries, and investment in people and technology ensures every experience delivered is simple, smart and stirring.

 

CH&CO employs nearly 6,500 people at more than 780 locations across the UK and Ireland and holds the top-level three-star Food Made Good rating from the Sustainable Restaurant Association for its long-term approach to operating in a socially responsible, sustainable way.

 

CH&CO holds a Royal Warrant for the provision of catering services to HM The Queen.

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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