BC Partners Ltd., a London-based private-equity firm, bought a controlling stake in Gruppo Coin SpA and said it plans to bid for the rest in a deal that would value the Italian department-store chain at 930 million euros ($1.3 billion.)
BC Partners agreed to pay PAI Partners 645 million euros for a 69.3 percent stake and an additional 87.8 million euros for a 9.4 stake, the companies said in a joint statement today. BC Partners offered to pay 6.50 euros a share for the rest. That’s an 8.5 percent discount to Coin’s May 6 closing price.
“Gruppo Coin is ideally positioned to continue its growth in all formats achieved in past six years,” said Nikos Stathopoulos, BC Partners’ managing partner, in the statement, citing the company’s market-leading position.
PAI sought to sell Coin after a five-year investment during which it added stores and revamped the company’s discount-clothing unit. Under PAI, Coin went from a loss in 2005 to a profit of 48.20 million euros last year. PAI, a private-equity firm based in Paris, bought 63 percent of Coin from the retailer’s founding family in 2005 for more than 181 million euros and later increased its holding.
“Going forward, Gruppo Coin might have less room to outperform the retail sector,” said Francesca Ferragina, an analyst at Cheuvreux in a note today, noting that the offer price was below her expectations of 8 euros a share. She suggested investors should sell their stock, given the limited upside.
Coin shares fell as much as 9.5 percent to 6.43 euros a share in Milan, the lowest price since Sept. 15. They traded at 6.45 euros a share at 11:13 a.m. today and have fallen 17 percent this year.
Private-equity firms are buying and selling companies to each other after the financial crisis brought the pace of deal-making to a near-halt for two years, preventing them from investing or returning cash to investors. Firms have led $117 billion of acquisitions this year, up 60 percent from the same period in 2010, according to data compiled by Bloomberg.
PAI, which manages a 2.7 billion-euro buyout fund, is also selling engineering company Spie and French insurance broker CEP, after entering exclusive talks to sell its stake in yogurt maker Yoplait to General Mills in March and agreeing to sell U.K. tire retailer Kwik-Fit Group Ltd. to Itochu Corp this year.
BC Partners in March raised 4 billion euros for a new fund while seeking another 2 billion euros. The London firm agreed to buy U.K. mobile-phone retailer Phones 4u from Providence Equity Partners LLC and is in talks to purchase U.K. cinema chain Odeon from Guy Hands’s Terra Firma Capital Partners Ltd., two people with knowledge of the matter said in April.
Today’s purchase comes amid consolidation in the Italian retail sector. La Rinascente, which operates Italian department stores including one overlooking Milan’s 14th century cathedral, last week received a 250 million-euro offer from Thailand’s Central Retail Corp. Ltd., according to two people familiar with the mater.
PAI was advised by UBS AG and Mediobanca - Banca di Credito Finanziario, according to the statement. BC Partners was advised by Bank of America Merrill Lynch Corp. and HSBC.