Jan 22 Reuters British catering company Compass Group on Monday agreed to buy rival CHCO in a deal valuing the Royal Opera House caterer at 475 million pounds 603.73 million, including debt, marking its biggest acquisition in Europe to date.

Compass, the world39;s largest catering group, has been looking to make bolton acquisitions as it bounces back from the pandemic.

CHCO, backed by private equity group Equistone, provides catering services to businesses, universities, sports and other events. Some of the venues it serves include London39;s Royal Opera House, Abbey Road Studios and the Royal Botanic Gardens at Kew in London.

Compass CEO Dominic Blakemore said in a statement that CHCO39;s strong brand identity would enable the company to capitalise on the significant growth potential in the market.

We can imagine potentially stronger margin dynamics in FY23 and we would expect clear synergy upside following integration with Compass, Barclays analysts wrote in a note.

There has been a bit of a drag to EPS forecasting not knowing how cash will be spent this year so the announcement of this deal will help to provide some clarity, they said.

There is an additional earnout over two years after the deal closes, depending on the profit growth of the business, Compass said.

CHCO Chief Executive Bill Toner said joining Compass Group offers huge potential for its clients.

Readingbased CHCO has more than 900 clients across 1,000 locations and currently generates annual…