French firms agree realisations

PAI has sold its fourth business this year, retailer Gruppo Coin, while Sagard Private Equity is nearing an exit from Souriau. The combined value of the exits approaches €1.4bn.

Paris-headquartered private equity firm PAI Partners has agreed to sell its 69 percent stake in Italian clothing retailer Gruppo Coin to buyout firm BC Partners, with other shareholders selling 9 percent. BC said it intends to launch a mandatory tender offer for the remaining shares. The deal is worth €930 million in total, lower than some press reports had suggested.

PAI declined to comment on the precise return delivered by the transaction, but a spokesman said the firm was very pleased with the “good return” generated by the exit. PAI acquired its stake in the business for €181 million in 2005, but has since held refinancings which make calculation of a return multiple difficult.

It is PAI's fourth exit this year following the sale of car maintenance group Kwik Fit, dairy products business Yoplait, and French loan insurance broker Compagnie Européenne de Prévoyance, which it agreed to sell to buyout firm JC Flowers last week. It has returned about €2 billion to its investors over the last 12 months, according to a spokesman.

BC had won exclusivity earlier in the year but was unable to agree an offer with PAI by the expiry date of that exclusivity period in early March. A source close to the firm said BC had been “playing it cool” with its bid and was prepared to walk away from a process if it was unable to get comfortable with the financial metrics of a transaction, as it did with phone retailer Phones4U earlier this year before returning to acquire the company. BC is also chasing Terra Firma-owned cinema chain Odeon.

BC is offering to pay €645 million for PAI’s stake, equivalent to €6.50 a share. The firm has offered the same price to Gruppo Coin’s management team, which holds 2.1 percent of the company, and investor Dicembre, which holds 7.3 percent. The tender offer for remaining shares will also be at €6.50 a share.

The total value of the transaction is €732 million; including the tender offer for remaining shares, the value rises to €930 million. The price represents a 7.1x multiple to the company’s earnings before interest, tax, depreciation and amortisation, according to a BC spokesperson. The deal is expected to close by the end of June.

USB and Mediobanca advised PAI on the deal, while Bank of America Merrill Lynch and HSBC advised BC. Financing for BC’s offer was arranged by Banca Imi, BNP Paribas, Crédit Agricole, HSBC, Mediobanca, Natixis, UBS and UniCredit.

Meanwhile, Sagard Private Equity Partners said it was in exclusive discussions to sell connector-manufacturer Souriau to defence group Esterline Technologies.

US-listed Esterline, which supplies components to the US military as well as civilian aircraft manufacturers like Boeing, said last week it had made a €483 million bid for 100% of Souriau’s share capital. It said it would finance the deal using debt and equity and expects the deal to close in or before July. Rothschild is advising Esterline on its bid, whilst Morgan Stanley is advising Sagard and Souri