Reuters: Private Equity: UPDATE 1-Buyout firms bid for Peugeot's GEFCO unit-sources

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UPDATE 1-Buyout firms bid for Peugeot's GEFCO unit-sources Jun 1st 2012, 12:58 Fri Jun 1, 2012 8:58am EDT * Apollo, AXA PE, Bain, CVC, PAI, Pamplona bid for GEFCO -sources * SNCF logistics group Geodis did not place bid -sources * Bids seen valuing GEFCO at 800 mln to 1.2 bln euros -sources By Sophie Sassard and Simon Meads PARIS/LONDON, June 1 (Reuters) - A field of mainly private equity firms has tabled offers for Peugeot's car delivery group GEFCO, valuing the business at up to 1.2 billion euros ($1.48 billion), people familiar with the situation said. At least six private equity groups including Apollo, Axa Private Equity, Bain, CVC, PAI and Pamplona tabled indicative offers for up to 90 percent of the trucking unit, which Peugeot is offloading after its operating losses in the second half slumped to 497 million euros.. Geodis, the logistics business owned by French state-owned rail operator SNCF, studied an offer for the company, but did not bid, two of the people said. Despite widespread interest from buyout groups, the sale of GEFCO is expected to be protracted and complicated as potential buyers worry about the extent of restructuring that the business needs and possible political interference. Meanwhile, seller PSA Peugeot Citroen has to contend with the turning around its own core manufacturing business and tackling debt, in the midst of closely scrutinised tie-up with U.S. manufacturer General Motors. PSA said it was flexible on the size of stake it would sell but wants to remain a strategic shareholder in the company. It is targeting proceeds of at least 560 million euros as part of plans to raise 1.5 billion euros from disposals. Bids for GEFCO are seen at between 4 and 6 times earnings before interest, tax, depreciation and amortisation of about 200 million euros, placing a value of 800 million to 1.2 billion euros on the business, the people said. CHALLENGES Although PSA's most profitable unit, registering a 13 percent rise in operating profits in 2011 to 223 million euros, GEFCO faces numerous challenges. Not least of the private equity suitors' concerns is retaining the job of shipping PSA vehicles, which accounted for more than 60 percent of the logistics group's sales last year, the people said. "It's a very difficult business to get confident about as an equity investor," said one banker familiar with the process. "Independent of the equity position, it's really going to be about the contracts GEFCO has with Peugeot." Prospective buyers also believe that GEFCO, which employs some 9,400 people worldwide, will need to make significant job cuts to be competitive, a move that could be difficult and unpopular under the newly elected socialist President Francois Hollande. If offers from private equity suitors are unsatisfactory, Hollande's regime could pressure Geodis into acting as a "white knight" for GEFCO, two people said. Credit Suisse, which is advising PSA on the sale, is offering prospective buyers a financing package of around 750 million euros, or 3.75 times earnings, those people added. PSA declined to comment, while the private equity firms declined to comment or were unavailable to comment. Credit Suisse also declined to comment Link this Share this Digg this Email Reprints

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