Facilities management company Mitie has agreed to sell its catering and hospitality business to the Queen’s caterers, CH&CO for up to £85m.

The deal will see Mitie and CH&CO enter into a strategic partnership to ensure that the Gather & Gather catering offer remains exclusive to Mitie’s clients as its only integrated FM sector partner. 

The sale comes as Mitie embark on a transformation under Chief Executive Phil Bentley after a series of profit warning two years ago. Shares were expected to rise 1% when the stock market opens, according to traders. 

Bentley commented: "Mitie's strategy is to invest in our core technology-led facilities management services - such as security, cleaning and engineering services - where we have a leading market position. Gather & Gather is a niche player in the £4bn UK contract catering market. By teaming up with CH&CO at this time, we believe this ensures the best choice and competitive pricing for our clients, whilst releasing funds for reinvestment and strengthening our balance sheet.”

Bill Toner, CEO of CH&CO, commented: "This acquisition is a key part of our growth strategy and represents a great opportunity for Mitie, Gather & Gather and CH&CO. We are very excited about the future growth potential for our business in our strategic partnership with Mitie - we bring scale and catering expertise; Mitie brings an extensive client list and innovation, and we both share a reputation for great customer service.  The sharing of best practice will drive an even better service for our clients, and the enlarged CH&CO group creates unparalleled opportunities for growth."

Mitie’s catering arm reported audited revenues of £136.1m and pretax profit of £4.1m in the year ending March. CH&CO will report revenue of around £300m for the year ending December 31st 2018.

Mitie Catering services in the UK and Ireland, employing over 3,600 people at over 330 sites. The staff and senior management team of Mitie Catering will transfer to CH&CO and will continue to run the business.