The ratings on Compass Group PLC (Compass), the U.K.-based catering services group, follow its demerger from Granada PLC (Granada; BBB+/Watch Dev/--) and reflect its market position as the world's leading provider of contract and concession catering services, as well as its consistently healthy cash flow generation and earnings growth. Following its demerger from the media activities of Granada, Compass is conducting an auction process to dispose of its hotels division. The CreditWatch placement reflects potential changes to both the group's business and financial profile. Reinvestment of proceeds of the sale of the hotels into businesses with a good strategic fit for the catering operations could, potentially, mitigate the loss of business diversity resulting from the demerger. As a result of
