PAI to buy Elior's Areas in €1.54bn deal

PAI and Elior entered exclusive talks earlier in March and an irrevocable offer for the acquisition of Areas has now been sent. 

In a statement, Elior disclosed it expected to close the sale during this summer and that the sale proceeds would be used to reduce Elior's leverage ratio to a range between 1.5-2x EBITDA.

If the transaction succeeds, PAI intends to support Areas in its organic growth and buy-and-build strategy. There is potential for new business development both in core geographies, notably in North America, and in new geographies, according to a statement by the GP.

PAI Europe VII, closed on €5bn in 2018, will be the vehicle used for the investment. The fund has invested in games publisher Asmodee, and door and gate manufacturer Stella Group. 

Autogrill (an Italy-based provider of food and beverage services for travellers), Sodexo (a French food services and facilities management company) and private equity firms Carlyle and Lone Star were contenders in the auction managed by Morgan Stanley and BNP Paribas, Reuters reported earlier this year.  

PAI acquired a stake in the business in 1997 in a transaction that was valued at around €424m, according to Unquote Data. Elior was then sold to Charterhouse in 2005 in a deal valued at more than €2bn, Unquote estimated at the time.

Subsequently, Elior was listed: it raised gross proceeds of €847m in its IPO on the Euronext Paris, giving it a market cap of €2.4bn, in 2014. Post-flotation, Charterhouse held a 40% stake in the company, though the GP partially exited the company in 2015 and 2016.

Founded in 1991 and headquartered in Paris, Elior is an operator in contract catering, concession catering and support services, and has become a benchmark player in the business, industry, education, healthcare and travel markets. The group currently has a market cap of around €2.32bn.

According to its 2018 annual report, Elior generated €6.69bn in turnover and posted a €285m adjusted EBITDA for the 12 months to 30 September.

Areas is Elior's concession catering activities brand and has a presence in 13 countries. The business provides services in rest areas, railway stations and airports, employing 23,000 people.

The 2018 annual report added that Elior's concession catering revenues climbed 3.3% year-on-year to €1.83bn, representing 27% of total consolidated revenues. Its adjusted EBITDA was €105m, which was slightly down from €110m in 2017. 

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