Charterhouse Said to Hire Banks for Elior Catering Sale

Charterhouse Capital Partners LLP hired banks to sell the main division of the French catering company Elior (ELRNV), people familiar with the matter said.

Rothschild, HSBC Holdings Plc and Credit Agricole SA (ACA) will manage the sale of the unit, which may be valued at more than 2 billion euros ($2.6 billion), said two of the people, who asked not to be identified as the process is private. The sale is expected to kick off in the first quarter of 2013 and will probably attract private equity firms, the people said.

The Elior business being sold, which provides catering services to companies, schools and hospitals, posted a 10 percent increase in operating profit to 179.8 million euros in the year ended Sept. 30, 2011, according to Elior’s website. Sales there climbed almost 10 percent to 2.81 billion euros.

The catering concession unit for airports, highways and cities isn’t for sale now, the people said. The whole of Elior may be valued at slightly less than 4 billion euros, two thirds of which is the catering business that’s being sold, one of the people said.

An official at Charterhouse declined to comment on any process. An Elior spokesman declined to comment while the person in charge of the Elior stake at Chequers Capital couldn’t be reached for comment. Representatives of the three banks declined to comment.

Elior, which was taken private by Charterhouse and other investors for 2.5 billion euros in 2006, said in March that it got the agreement of more than 95 percent of its creditors to extend the maturity of most of its loans and push back its main maturity to 2017.

Founded 1991

Credit Agricole, Morgan Stanley and the bank then known as Merrill Lynch & Co. led lenders in providing about 2 billion euros of leveraged loans to back the buyout six years ago, according to data compiled by Bloomberg.

Elior, Europe’s third-largest contracted food-service provider, was founded in 1991 by Francis Markus and Robert Zolade.

London-based Charterhouse owns 62 percent of the company that controls Elior, according to its website, while Zolade controls about 25 percent. Chequers Capital funds own 7.8 percent and other investors the rest.

Compass Group Plc (CPG), the world’s biggest catering company, said in September that it would expand cost-cutting across Europe and restructure operations in southern Europe to combat worsening conditions in the region. Sodexo (SW), the company’s biggest rival, said Nov. 8 that the economic climate is weighing on profitability, particularly in Europe.

Compass and Sodexo respectively trade at about 12 times and 11 times this year’s estimated earnings before interest and taxes, according to data compiled by Bloomberg.

To contact the reporters on this story: Francois de Beaupuy in Paris at fdebeaupuy@bloomberg.net; Jacqueline Simmons in Paris at jackiem@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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