French supermarket retailer Casino, which has been divesting assets to trim debts, said on Thursday that it had agreed to sell its contract catering business 'R2C' to Britain's Compass.
The deal, which one source close to the matter said was worth €25 to €30 million euros, was expected to close by the end of the first half of the year.
‘With this operation, the Casino Group is pursuing the initiatives already under way to significantly increase its profitability and strengthen its financial profile, in line with its strategic priorities,’ the company said in a statement.
Last month, when Casino achieved a target set out last year of €1.5 billion in asset sales, the company had said it would examine further steps to cut debt.
Casino had its credit rating cut to 'junk' by Standard & Poor's in March 2016. Its shares fell nearly 30% in 2018, partly on concerns over its balance sheet and parent group Rallye's ability to refinance its debt.
Commenting on the deal, Bruno Monteyne of Bernstein Research said, "From Compass' point of view this is a slightly odd purchase. R2C seems a very standard corporate caterer and therefore at odds with Compass' historical acquisition plan to buy bolt-on companies which bring new expertise, technology or strong management teams; this feels more like an in-fill.
"It is also unusual to see Compass make an acquisition in France, a competitive market where industry growth has been sluggish; potentially the plan is to get Compass closer to Sodexo and Elior in the market."