PARIS (Reuters) - France's Sodexo EXHO.PA is buying Centerplate, a U.S. company that provides food and hospitality services at sports, convention and entertainment venues, for $675 million in cash to raise its profile in the U.S. sports and leisure market.
The takeover comes as Sodexo looks to get back on track after cutting its full-year sales growth target in July after a weaker than expected third-quarter performance.
Sodexo, the world's second-biggest catering services company behind Compass Group CPG.L, said the Centerplate deal would more than double current revenue in sports and leisure, given that Centerplate runs services at high-profile events such as American Football's Super Bowl and the U.S. Presidential inaugural balls.
Sodexo, which has the catering contract for the Tour Eiffel restaurant in Paris and the Hollywood Bowl in Los Angeles, is buying Centerplate from private equity firm Olympus Partners.
The takeover is expected to provide a modest boost to Sodexo’s earnings from 2018 onwards, the company added.
Shares in Sodexo, which publishes annual results on Nov. 16, edged up in early trading but virtually flat by 1041 GMT.
“The acquisition of Centerplate looks a sensible, albeit perhaps defensive, move with reasonable value creation credentials,” said Jefferies analysts, who also noted that rival Compass had “demonstrated more consistent U.S revenue growth”.
The combined group, with pro-forma revenue of 1.7 billion euros ($2 billion), should gain significant revenue and cost benefits, gradually ramping up in the first year, Sodexo said.
The transaction will be financed from existing cash and credit facilities and have a limited impact on Sodexo’s debt.
Sodexo Chief Executive Michel Landel said last year that the company planned to accelerate the pace of its acquisitions.
Recent deals have included the purchase of Prestige Nursing + Care, a British home-care provider, and Morris Corporation, an Australian facilities management services provider to mining and oil and gas companies.
($1 = 0.8446 euros)
Reporting by Dominique Vidalon and Sudip Kar-Gupta; Editing by David Goodman
Our Standards: The Thomson Reuters Trust Principles.