Acquisition

Compass Group PLC 6 February 2001 6 February 2001 COMPASS GROUP TO ACQUIRE US HEALTHCARE FOODSERVICE COMPANY MORRISON MANAGEMENT SPECIALISTS Compass Group PLC is delighted to announce its agreement to acquire Morrison Management Specialists Inc., the second-largest US healthcare and senior living/retirement foodservice company. The consideration payable by Compass Group for the Morrison share capital is $563m (£382m), which will be paid in cash from banking facilities. The Boards of Directors of both companies have unanimously approved the agreement, under which an acquisition subsidiary of Compass Group will commence a tender offer to purchase all shares of Morrison's outstanding common stock for $40 per share, in cash. The tender offer, which is not subject to a financing condition, is expected to commence within the next 10 business days and is expected to close in the first week of April 2001. Michael J. Bailey, Chief Executive Compass Group PLC, said, 'We are delighted with this acquisition. Morrison is a business I have admired for many years and is a perfect fit for the Group as it gives us a market-leading position in the US healthcare sector, complementing our existing healthcare business worldwide. In particular, Morrison's experience and infrastructure in the acute care hospital market has been a missing ingredient in our North American portfolio until now. There is no doubt that Glenn Davenport and his management team have built an outstanding focused business and, with his team and our resources, there is no question that we have an excellent platform for future growth in the US healthcare sector.' In the US, the healthcare foodservice market is estimated to have annual revenues in excess of $16bn, of which approximately 30% is outsourced to specialist foodservice organizations. Morrison serves over 475 clients in the healthcare and senior living markets through Morrison Healthcare Services and Morrison Senior Dining. In the financial year ended 31 May 2000, Morrison experienced a 20% increase in managed volume (total operating costs managed) to $778.6m and a 36% increase in revenues to $441.1m. Earnings before interest and taxes (EBIT) were $26.3m in the financial year 2000. For the six months ended November 30, 2000, compared with the same period in the prior year, Morrison achieved an 18% increase in managed volume to $429.2m, a 35% gain in revenues to $263.4m. and a 28% increase in EBIT to $16.6m. Morrison's net assets at November 30, 2000, were $21.0m, including debt of $63m which will be assumed by Compass Group. Gary Green, President & Chief Executive, Compass Group, North America, said, ' Morrison has a proven track record of being the 'best in class' in the provision of foodservice for the healthcare industry. This agreement will enable us to provide the best possible service and range of choices to the healthcare and senior dining marketplace.' He confirmed that Compass Group's healthcare business in the US, which in North America specializes in senior living/retirement foodservice, will combine with Morrison Senior Dining to create a formidable force in the senior living/retirement foodservice industry. Joining Gary Green in making the announcement, Glenn Davenport, who continues as President & Chief Executive Officer of Morrison, commented, 'This is a great move for our shareholders, the Morrison team and for 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 Morrison and our employees to reach many of our goals. We share a commitment to excellent service, quality, team member development and growth. Our clients, team members and shareholders stand only to gain through the strengths and benefits we'll see as being part of this group.' All members of the senior management teams of Morrison will maintain their current leadership roles and Morrison will continue to operate under the Morrison name. Compass Group was advised by Credit Suisse First Boston Corporation and Morrison was advised by Bear Stearns & Co. Inc. Ends For further information contact: Compass Group PLC Michael J Bailey, Group Chief Executive Tel: 01932 573 000 Andrew Lynch, Group Finance Director Tel: 01932 573 000 Hudson Sandler Nick Lyon Tel: 020 7796 4133 BACKGROUND TO ACQUISITION The transaction is conditional on the tender of a majority of the outstanding shares of the Morrison common stock on a fully diluted basis, the expiration or early termination of the Hart-Scott-Rodino waiting period and other customary conditions. Compass Group is the world's largest foodservice company with annual revenues in excess of £7.3bn employing over 250,000 people in 80 countries worldwide. Further information on the Group can be found at www.compass-group.com
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