CHICAGO (Reuters) – Hospitality company Centerplate will acquire smaller rival Boston Culinary Group Inc in a move to beef up its presence in the large college market, as well as other entertainment venues, the company said on Friday.
Terms of the deal were not disclosed, but Centerplate Chief Executive Officer Desmond Hague said it will be less than the $210 million private equity firm Kohlberg & Co paid in January for Centerplate.
Companies like Centerplate and Boston Culinary handle food service as well as concession sales at numerous venues around the country, including sports stadiums, airports and convention centers.
“We vehemently believe that the college market is a boom business for us for many, many years,” Hague said in a telephone interview.
The deal, which is expected to close in the first quarter of 2010, will take Centerplate from about 12 college accounts to almost 30, adding such customers as the University of Florida and Virginia Tech, he said.
Boston Culinary also will add business at ski resorts, performing arts centers and cinemas, creating a company with combined annual revenue of almost $1 billion and more than 30,000 employees.
Adding Boston Culinary and its accounts with the Miami Dolphins of the National Football League, Florida Marlins of Major league Baseball and Florida Panthers of the National Hockey League also will boost Centerplate’s existing business with pro sports teams, Hague said.
While Centerplate has heavy presence in several of the pro markets, there is limited growth with only so many teams, Hague said. On the other hand, there are hundreds and hundreds of colleges where Centerplate could win contracts.
“That’s where we feel there will be significant growth for Centerplate throughout the next decade,” he said.
However, Centerplate is not alone in eyeing that market.
In October, sports, entertainment and media company IMG and a hospitality company owned by the New York Yankees and Dallas Cowboys formed a joint venture to provide premium seat licenses, suite and ticket sales services to the college market. IMG and Legends Hospitality, which the sports clubs founded with Goldman Sachs (GS.N) and private equity firm CIC Partners, also will seek to operate concessions.
Centerplate’s Hague said the focus will be on digesting Boston Culinary and no job cuts are planned. However, in an industry where profits are measured in pennies, Centerplate will not hesitate to buy more companies.
While Centerplate has held up well in the slowdown as consumers and companies dial back spending at the ballparks and other entertainment venues, concessionaires like Centerplate are looking for ways to cut costs, including substituting less-costly skirt steak for filet mignon, cutting portion sizes or offering value deals, Hague said.
The sports and entertainment sectors where Stamford, Connecticut-based Centerplate competes totals about $10 billion in annual revenue, he said.
Other large players include Aramark, which is owned by Goldman Sachs and other private equity firms; Delaware North Companies; Compass Group PLC’s(CPG.L) Levy Restaurants; and France’s Sodexo (EXHO.PA).
Under the deal, Hague will remain Centerplate’s CEO, while Boston Culinary founder Joseph O’Donnell will be chairman and a significant shareholder. O’Donnell also will join Centerplate’s board.
Centerplate, serving more than 140 facilities, has provided food service at the Super Bowl, World Series, the Belmont Stakes horse race and 15 presidential inaugural balls. (Reporting by Ben Klayman; editing by Carol Bishopric)