Elior: a sale of Areas for nearly 1.5 billion takes shape

The French group has entered into exclusive negotiations with PAI to sell its concession catering business. After the fall of the price, the doubt persists on the outcome of the sale.

Philippe Guillemot, CEO of Elior, has opened exclusive negotiations with PAI to sell Areas to him.

Last straight line for the sale of the catering center concession ofElior. Philippe Guillemot, the CEO of the French group has opened exclusive negotiations with the PAI Partners fund to sell Areas. It would be valued at nearly 1.5 billion euros on the basis of current terms, sources indicate, the top of the range announced Tuesday evening by Reuters.

Sino-Swiss say the best

The French fund’s offer turns out to be much lower than that of the Swiss Gategroup, owned by Chinese HNA which would have offered 1.75 billion euros, according to these same sources and almost equivalent to that of the American Lonestar. “The offer supported by the Chinese conglomerate, currently very constrained by asset sales, was not considered sufficiently solid and financially guaranteed. As for that of Lonestar, it was accompanied by too many conditions precedent ”, indicates a person close to the file.

But will the sale to PAI come to an end? Penalized by several warnings on its results, the catering specialist saw its share price fall by more than 7% at the opening on Wednesday after the Reuters agency specified that the sale would not exceed 1.3 billion , a figure far below analysts’ expectations. But also of Philippe Guillemot himself. According to initial estimates, Elior would indeed have rather set the bar at 1.6 billion euros.

Tension on valuation

“The price is close to 1.5 billion euros, sources say. Genuine exclusive negotiations will now begin ”. If the figure is further revised downwards, the sale may not take place. But as it is, it is not completely indecent, we are assured on the side of Elior: “The parameter to be taken into account is the valuation of Areas according to its Ebit, that is to say after depreciation, and not its Ebitda. It’s an activity that involves a lot of investment ”. A shade that is not incidental. At 1.5 billion euros, Areas would be valued only 7.5 times its Ebitda, but more than 13 times its Ebit (around 110 million euros).

It remains to be seen whether Philippe Guillemot will decide to sell anyway. In view of the stock market valuations of its competitors, the Italian Autogrill and the British SSP Group, Elior still expected a valuation between 8 and 12 times its Ebitda.