Vestar buys French funeral group for €293m

Vestar Capital Partners, the US-based private equity firm, is to acquire the majority of funeral operator Service Corporation International’s (SCI) French operations for $372m.

SCI, the Houston-based funeral and cemetery operator, has signed an agreement to sell 75 percent of its French operations to US private equity firm Vestar Capital Partners. SCI will retain the remaining 25 percent.

The business, known as Groupe OGF, posted sales of €515 million in 2003 and is the leading undertaker in France. It organised 138,000 funerals last year and erected 20,000 tombstones, and is the owner of 40 of France’s 100 crematoriums.

Under the terms of the deal, Vestar will own 65 percent and the management team 10 percent. “This industry is attractive to financial buyers because it is stable, with top line sales growth of 3-5 percent that tracks population growth and inflation,” Robert Rosner of Vestar told the Financial Times.

On the downside, profit margins in the funerals sector have been falling due to an increase in cremation rather than burial. Burials have a wider range of associated services and fees.

The deal completes the retreat of SCI from its European businesses, following its sale in 2002 of UK funeral group Dignity Caring Funeral Services to private equity firm HSBC Private Equity (now Montagu Equity) for £220 million. It will allow SCI to reduce debt and focus on its North American activities.

Vestar opened its first European office in Paris in September 2000, and then opened an office in Milan six months later. It has US offices in New York and Denver and invests in companies worth between $100 million and $3 billion from a $4 billion fund.