PAI's sale of B&B Hotels to Goldman Sachs nears €2bn

The deal, sourced in a bilateral fashion via a pre-emptive bid, sees Goldman Sachs agree to acquire a substantial majority stake in the business, while management retains the remainder, Unquote understands. 

Bloomberg reported last week that the deal under discussion was worth almost €2bn; Unquote understands this valuation is roughly correct. 

Senior debt will support the transaction, with debt representing less than 50% of the deal, Unquote understands. 

The sale generated a 3x money multiple for the vendor, Unquote has learned. 

When PAI acquired the asset, the French budget accommodation operator managed 343 hotels in seven countries. Under the GP's ownership, the company expanded internationally: B&B is now also present in Brazil, Austria, Switzerland, Belgium, Portugal and Slovenia, and existing hotels have been refurbished. This resulted in the group almost doubling EBITDA since PAI's acquisition, according to a statement.

PAI and Goldman Sachs have both declined to comment. 

Previous funding
The latest transaction marks the fifth change of hands B&B Hotels has witnessed since inception. In July 2003, when it still operated under the Galaxie brand, the company was fully acquired by mid-market GP Duke Street from founder François Branellec for more than €200m.

The company subsequently changed hands to Eurazeo for an estimated €400m in 2005. The SBO marked the end of an auction process initiated by Duke Street with the aim to exit B&B's real-estate assets only; however, Eurazeo's bid persuaded the seller to offload the whole business. The listed GP snapped up a 73% stake, while the balance was jointly held by Montefiore and B&B's management team.

Carlyle became the majority owner of B&B Hotels, alongside minority investor Montefiore, in a 2010 deal that valued the business at €480m.

PAI then acquired the business in 2016 via its sixth buyout fund, which closed on its €3.3bn hard-cap the year before. The transaction was valued at €790m, Unquote has learned. 

A €339m senior debt package, €50m rolling credit facility and €40m capex facility were provided by BNP Paribas, Crédit Agricole, Credit Suisse, Natixis and Societe Generale. Carlyle's sale of its majority stake could have resulted in a return in excess of 2x, a source told Unquote at the time.

Company
Founded in 1990, B&B runs a network of budget accommodation establishments. Headquartered in Brest, B&B operates a network of 476 budget hotels as of December 2018, of which 275 are in France, 122 in Germany, 35 in Italy, 29 in Spain, six in Poland, two in Switzerland, two in Brazil, and one each in the Czech Republic, Portugal, Belgium, Austria, Slovenia.

The business generated €580m in turnover in 2018.

People
PAI Partners – Gaëlle d'Engremont (partner); Andreas Kumeth (principal).
B&B Hotels – Fabrice Collet (CEO).
Goldman Sachs – Matthias Hieber (managing director); Scarlett Omar-Broca (executive director).

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• Topics
• Exits
• Buyouts
• France
• Consumer
• France
• PAI Partners
• Goldman Sachs