BREAKING NEWS: Mitie offloads catering division for £85m after strategic review

Gather & Gather

Outsourcer Mitie Group is selling its catering and hospitality business to CH&CO in a cash deal worth £85m.

As part of the agreement, 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 best in catering choice and competitive pricing.

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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.

While Mitie insisted that catering services would remain an important part of its IFM service offering to its customers, under the strategic partnership with CH&CO, Mitie will no longer be self-delivering this service.

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, CEO of 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 provides contemporary contract workplace dining, hospitality and event catering services in the UK and Ireland, employing more than 3,600 people at over 330 sites across the UK and Ireland.

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.

Bill Toner, CEO of CH&CO, which itself made sales of £300m last year, 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.

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Tags : acquisitionCH&CoGather & GatherMitieMitie Catering
Andrew Seymour

The author Andrew Seymour

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