US. Compass Group USA Investments, a wholly owned subsidiary of UK-based Compass Group, and San Diego, California-based Creative Host Services have entered into an agreement under which a subsidiary of Compass Group will acquire Creative Host in a cash tender offer and subsequent merger.
The Boards of Directors of both companies unanimously approved the agreement, under which Yorkmont Five – an acquisition subsidiary of Compass Group USA Investments – will commence a tender offer to purchase all shares of Creative Host’s outstanding common stock for cash. In addition, certain principal shareholders of Creative Host, representing approximately 40.3% of the shares outstanding, have committed to tender their shares in the offer.
Gary Green, president and CEO of Compass Group North America said: “Creative Host’s management team and track record of growth in the airport concessions market fits nicely with our existing airport operations and provides us with a strategic position for further growth.”
Creative Host operates over 100 concession locations – including food courts, news and gift stores and cocktail lounges – at approximately 30 (mainly small to medium-sized) US airports through Creative Host Services and GladCo Enterprises. It co-brands with companies such as Schlotzky’s Deli, TCBY Enterprises and Yuengling Brewery, and also offers specialty niche concepts of its own such as Cafe and Spirits (a cafe/bar with a small library) and Creative Croissants Bakery Delis. Last year the company had revenues of over US$40 million.
Creative Host Services also provides inflight catering services. The company’s GladCo Enterprises subsidiary operates concessions at six airports and strengthens the business on the east Coast. Founder Sayed Ali is believed to own 12% of the company. The parties said the management team of Creative Host will remain with the business following the acquisition.
The company’s largest locations are at Boston, Denver, Portland, Los Angeles, Pittsburgh and Newark International airports. Others include: Albany, Allentown, Appleton, Atlantic City, Baton Rouge, Cedar Rapids, Charleston, Columbia, Des Moines, Freeland, Greensboro, Lexington, Madison, Midland, Ontario, Portland, Roanoke, Shreveport and Sioux Falls
Sayed Ali, who continues as Creative Host president and CEO, commented: “This is a great move for our shareholders, the Creative Host team and our clients and customers. Compass Group is the largest foodservice company in the world and a major player in the US foodservice market. It brings tremendous opportunities for Creative Host and our employees to reach many of our goals. Our clients and team members stand only to gain through the strengths and benefits we’ll see as being part of this group.”
Compass Group – together with its airports arm Select Service Partner- is the world’s largest contract foodservice company with operations in more than 90 countries. It has more than 425,000 employees and was recognised in 2003 by Fortune as the world’s tenth largest employer. The company reports annual revenues of US$18 billion.
