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Compass, the world's largest caterer, is to double its share buy-back to £1 billion ($2.7 billion), after agreeing to sell its European vending business, Selecta, for £772.5 million ($2.07 billion).
The German private equity house Allianz Capital Partners is to buy the business after fighting off fierce competition from financier Guy Hands' Terra Firma group.
Following the completion of the deal, Compass intends to return £500 million of the proceeds to investors by way of a share buy-back programme over the next 12 to 18 months. This is on top of the £500 million returned following the sale of the travel services business Select Services Partner and Moto last year.
Compass will also make a special contribution of £45 million into its UK pension fund, adding to the £280 million it put in last year. The remaining cash will be used to reduce the group's net debt.
The sale of Selecta comes as Compass rebuilds its fortunes after a fraud and bribery scandal. The company was sued in the US last year by rivals over allegations that it fraudulently won UN contracts. In October, it agreed an out-of-court settlement for all claims related to corruption.
Compass announced the sale of the division after a strategic review in November when it said it would focus on growing organically rather than through acquisitions, and was to pull out of 90 countries in which it operated.
The company's UK division, which supplies school meals, also came under fire from TV chef Jamie Oliver as part of his crackdown on unhealthy meals in schools.
The sale, which is conditional on clearance by competition authorities, is expected to be completed in July. Compass is expected to deliver a strong set of half-year figures on Thursday.
- INDEPENDENT
