Sodexo Signs 10-Year Contract With Rio Tinto Worth $1.86 Billion -- Update

By Ambroise Ecorcheville and Nick Kostov

PARIS--Catering and services company Sodexo SA (SW.FR) said Wednesday it signed a 10-year contract worth an estimated A$2.5 billion ($1.86 billion) with mining company Rio Tinto Ltd. (RIO.AU) to maintain all of its mining camps in Australia's Pilbara region.

Sodexo, whose services include catering, cleaning and property management, said it would provide the full range of its services by the second half of 2016.

"This contract validates our decision to reorganize Sodexo to focus on segments of clients, rather than by geography," at the end of 2015, said Sodexo Chief Executive Michel Landel.

Rio Tinto's assets in the Pilbara region comprise ports, towns, aerodromes, operational sites, accommodation sites, commercial buildings and residential properties.

The roughly 170 million euros ($189 million) in annual revenue from the contract will make up 10% of sales for Sodexo's Global Energy & Resources division, which in turn generates around 10% of Sodexo's overall revenue.

The French company employs 420,000 people and had a market capitalization of EUR15 billion at Tuesday's close. About 10 years ago, the company decided to diversify from providing food and catering services and prepaid vouchers to cleaning, maintenance and property management. It has already worked for the likes of Royal Dutch Shell PLC (RDSA) and BHP Billiton Ltd. (BHP.AU)

"Our clients are increasingly asking us to integrate all of our services in a single global offer," Mr Landel said.

Write to Ambroise Ecorcheville at ambroise.ecorcheville@wsj.com and Nick Kostov at nick.kostov@wsj.com

(END) Dow Jones Newswires

March 16, 2016 05:33 ET (09:33 GMT)

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