Apax prepares Little Chef offer

Apax Partners is one of several private equity firms on the shortlist to acquire the Little Chef and Travelodge businesses put up for sale by Compass.

UK buyout firm Apax Partners has emerged as one of the leading candidates to acquire Little Chef and Travelodge, the two businesses being sold by UK catering business Compass.

Schroder Salomon Smith Barney, handling the auction on behalf of Compass, has selected a list of five bidders, which includes three financial buyers. Also bidding for the businesses is Punch Taverns founder Hugh Osmond, who has teamed up with Alan McIntosh via his new investment vehicle Sun Capital.

The Sunday Times reports Compass is looking to recoup around £800m for the businesses it acquired as part of the merger and subsequent demerger from Granada. Analysts are suggesting though that the likely sale price will be nearer the £600m mark, with many regarding the economy hotel business offering far greater potential for growth than the Little Chef restaurant chain. Travelodge and Little Chef reported profits of about £100m on sales of £320m last year.

The sale will complete a series of disposals by Compass as it looks to focus on its core catering businesses. Last year it sold the Le Meridien hotel business to Nomura International’s Principal Finance group in a £1.9bn transaction. The sale of Travelodge and Little Chef is expected to complete before the end of 2002.