PAI goes exclusive in Saur auction

Paribas Affaires Industrielles (PAI) is in exclusive talks for the next jumbo buyout in France. The firm beat four other shortlisted bidders to go exclusive with a €1.04bn bid for Saur, the water treatment unit of Bouygues, the French telecoms and construction conglomerate.

BNP Paribas is mandated to arrange the supporting debt package, but could bring in other lenders to share the underwriting risk. Early indications place leverage between 6x and 7x, possibly towards the upper end of the scale. Bouygues has been looking to unload Saur, one of its least productive units, since July.

Late last week, banking sources had tipped Eurazeo, a unit of investment bank Lazard, as close to a deal. Both firms were on the shortlist, with CVC, BC Partners and Candover. Initially, more than 10 potential bidders expressed interest in the company.

Bouygues has been looking to unload the business because it aims to focus on construction and mobile telephony. However, under the terms of the deal now on the table, it would retain a 15% stake through a holding company set up with PAI.

The deal excludes Saur’s activities in Italy and Africa. Ivory Coast is a significant part of the African operation, although tensions are mounting in the former French colony.

Over the past eight years, PAI has led transactions in eight European countries. It is controlled by 11 partners and manages funds in excess of €5bn. Its last fund, PAI Europe III, closed in June 2002. Capital was sourced from more than 50 investors from 13 different countries; 52% from Europe; 40% from North America and 8% from Asian and the Middle East.

The firm has made two other investments this year, acquiring a controlling stake in Vivarte, a distributor of shoes and clothing, in April. Just before that, it bought a 66.85% share in Saeco, a company publicly listed on the Milan stock exchange. Saeco produces automatic espresso coffee machines.

Saur provides water and water-treatment services to 6m people in France, or about 10% of the population. It posted revenue of €1.8bn for the first nine months of this year. The unit does business in 17 countries, deriving 70% of sales from France, 10% from other European countries and 20% from the rest of the world.

Saur and Bouygues’ Workers Councils have been convened for a meeting on this subject on November 17.