New Delhi, 20th December 2022:- Elior India has announced the sale of its business to Compass India. Mr. Rohit Sawhney, interim CEO of Elior India, informed employees in an internal announcement that a business transfer agreement had been signed with the Compass Group for the sale of Elior India’s business. The announcement states that the transaction involves only the sale of contracts to the Compass Group, with Elior India retaining staff, as agreed upon between the two companies.
The purchase of these contracts by Compass will enable it to become a market leader in key corporate catering markets in Mumbai, Bangalore, and Delhi. While at the other end, The Elior Group is hoping that with the sale of these contracts to Compass, it will be able to exit India even though it remains in a protracted legal battle with its former India CEO. While it is unusual for any buyer to engage in a transaction during the pendency of a litigation, it seems the Compass Group, which is headquartered in London, was willing to ignore the legal compliance issues and proceed with the transaction. Earlier, a French company Sodexo and an Indian company, Foodlinks also shied away from the transaction due to legal compliance issues. It appears Compass was able to secure an attractive price for the purchase of the contracts due to the ongoing litigation.
The announcement made by the interim CEO, Rohit Sawhney further goes on to state that the sale of these contracts has already been communicated to the clients, and over the next 3 months, the sale to Compass will be concluded by Elior India, even as the current litigation with the former CEO rages on.
Last week, the Karnataka High Court removed the stay on the arbitration between the former CEO and Elior India and has now issued an order directing the arbitration to be resumed even as the Compass Group progresses with the transfer of the contracts. It now remains to be seen what the outcome of the arbitration will be given that the Elior India Interim CEO has already announced to the clients the signing of the sale agreement with the Compass Group.