Elior: The merger between a division of Derichebourg and Elior is now signed

(BFM Bourse) – The collective catering group announced on Monday that it had signed the memorandum of understanding to take over the multi-service branch of the group specializing in metal recycling. It remains to obtain the green light from the AMF, the European Commission and the shareholders.

Nearly three months after the announcement of their merger, Elior and Derichebourg take an important step to ratify it. The group of collective services and the metal recycling specialist thus announced on Monday the signing of the memorandum of understanding and the contribution agreement concerning the sale of the multi-services branch of Derichebourg to Elior.

“This signature, unanimously approved by the boards of directors of Elior Group and Derichebourg, confirms the financial terms of the transaction as communicated on December 20,” the two companies said in a press release.

A general meeting in mid-April

Several green lights remain to be obtained for the operation to be finalized: that of the European Commission, the approval of the Financial Markets Authority for a derogation granted to Derichebourg not to have to launch a public purchase offer, and, finally, the Elior shareholders’ agreement.

The latter will meet at a general meeting on April 18 and will thus decide on the operation, obviously excluding Derichebourg, which currently owns just over 24% of the capital of Elior. The two companies expect the final completion of the operation to be completed on April 18.

For the time being, the two companies have indicated that three investment funds, BDL Capital Management, Permian Investment Partners, FSP and EMESA, which together represent 24.4% of the capital and voting rights, have given their support to the operation and will thus vote in favor of it in mid-April.

On the Paris Stock Exchange, the Elior share is gaining ground, rising 7% around 11:30 a.m., one of the largest increases in the SBF 120 index.

An operation to reduce indebtedness

As a reminder, the takeover of the multi-services branch of Derichebourg (which includes maintenance or industrial cleaning) should allow Elior to strengthen itself, by taking over activities that are very complementary to its own, while reducing its debt.

This contribution of assets will in fact enable Elior to increase its revenues by 940 million euros and its gross operating income (Ebitda) and therefore to reduce its debt leverage, measured by the net debt compared to the ‘Ebitda.

Including the contribution of this branch of Derichebourg, Elior’s debt leverage would fall from 8.3 at the end of September 2022 to 6.2. A crucial point since Elior is supposed to respect a debt leverage lower than 7.5 at the end of March 2023, 6 at the end of September 2023 and 4.5 from the end of March 2024 to respect its “covenants”, i.e. i.e. its commitments to its creditors.

“This operation may seem attractive on paper allowing Elior not to increase its financial structure and to diversify its activities (multiservice will represent 31% of activity)”, explained TP ICAP Midcap in December.

In exchange for the sale of its division, Derichebourg will obtain Elior shares, which will allow it to increase its capital to reach 48.4% of the total. This transaction will take place on the basis of a price per Elior share of 5.65 euros, ie more than 50% more than the current price (3.72 euros).

As a result, Elior’s governance will change profoundly: Daniel Derichebourg, CEO of Derichebourg, will become CEO of the collective catering group and will give up his operational mandates at Derichebourg.

“In the short term, the arrival of Daniel Derichebourg could create a clash of cultures within the group”, judged TP ICAP Midcap, in December.

“Although the planned acquisition of DMS [Derichebourg Multiservices, NDLR] relieves the financial situation somewhat, it will not make it possible to solve certain structural problems, and the visibility on the execution remains weak, in our opinion” nuanced for its part, at the end of January, Stifel.

Julien Marion – ©2023 BFM Bourse

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