PAI Partners is in pole position to acquire the concession catering unit of Elior Group SA in a deal that could value the target business at up to €1.5 billion, Reuters reported, citing four people with knowledge of the auction.
The Areas SA unit provides railway and motorway catering services in 13 countries across the U.S., Europe, Mexico and Chile, the report noted. It is valued at up to 7.5x its core earnings of about €200 million, according to the sources, with one saying the final price is likely to be about €1.3 billion.
The Paris-based private equity firm is competing with U.S. investment firm Lone Star and Swiss airline caterer gategroup Holding AG, which is part of Chinese conglomerate HNA Group Co. Ltd., sources said. Gategroup was not able to offer a competitive bid for Areas as HNA was not willing to finance large acquisitions because of its debt pile, the people said.
Carlyle Group LP is thinking of leaving the race as it values the unit at a lower price, two of the sources said. The U.S. buyout firm initially partnered with PAI in relation to the auction, which is led by Morgan Stanley and BNP Paribas.
Elior, PAI, Carlyle, Lone Star and Gategroup did not comment on the matter, according to Reuters.