Cinven’s GrandVision

Private equity firm Cinven has bought Photo Service and Photo Station, the photo-finishing businesses of French optical group GrandVision, for $249.3m.

The deal will be made through Photo Europe, a holding company created by Cinven for the transaction and will be financed with equity, mezzanine and senior debt.

Cinven, management and a small group of private investors led by Michel Likerman, co-founder of Photo Service, will provide equity. GrandVision will also provide a loan of $11.5m as part of the deal.

According to sources cited by the Financial News, Goldman Sachs has been retained to organise about $169m in debt financing.

Senior debt worth about $134m will be divided into two tranches, one of which will be amortised over a seven year period, while a second tranche will sell after seven years.

The remaining $35m will be made up of mezzanine loans.

The Photo Service and Photo Station businesses last year had revenues of $212.5m and earnings of $46.8m. Together, they represent 28 per cent of GrandVision’s turnover and 60 per cent of its operating profit.

However, market observers believe GrandVision no longer needs the photo branch because the revenues from its optical business cover its investments.

Last year, GrandVision’s profits were down 53 per cent to $13.3m, but turnover was up 14 per cent at $753m. Shares in the company, listed on the Paris bourse, have risen by more than 10 per cent per cent to a year-high of $21.1 on the news.

Cinven has led buyouts worth about $14.3bn since 1995. With Investcorp, it recently missed out on buying the precious metals and catalysts business of chemicals group Degussa.