LONDON/PARIS, March 19 (Reuters) - European private equity fund PAI Partners has emerged as the frontrunner in the auction for the concession catering business of France’s Elior Group , four sources familiar with the matter told Reuters.
Paris-based PAI has made it to the final stages of the process to buy the business, known as Areas.
The auction began towards the end of last year drawing interest from private equity funds and some industry players.
Areas handles railway and motorway catering services in 13 countries spanning Europe, the United States, Mexico and Chile.
The sale, led by Morgan Stanley and BNP Paribas, is being wrapped up and could be worth 1 billion euros to 1.5 billion euros ($1.13 billion to $1.70 billion), the sources said.
PAI is vying with U.S. investment firm Lone Star and Swiss airline caterer Gategroup, part of Chinese conglomerate HNA Group, the sources said.
U.S. buyout fund Carlyle, which initially teamed up with PAI Partners, is considering pulling out because it values the business at a lower price, two of the sources said.
Gategroup was unable to submit a competitive price for Areas, the sources said, because of HNA’s reluctance to fund big acquisitions as the Chinese airlines-to-finance conglomerate needs to cut its debt pile.
Areas is valued at up to 7.5 times its core earnings of about 200 million euros, the sources said, with one adding the final price might be closer to 1.3 billion euros.
Elior, PAI, Carlyle, Lone Star and Gategroup declined to comment.
$1 = 0.8811 euros Reporting by Pamela Barbaglia Editing by Edmund Blair