UPDATE 2-Permira wants 2 bln euros for Provimi-sources

Tue May 24, 2011 12:49pm EDT

* Strong interest from trade buyers-sources

* Nutreco declines to comment on reported interest

(Recasts with sources on valuation)

LONDON/AMSTERDAM, May 24 (Reuters) - Private equity firm Permira [PERM.UL] expects to sell French animal feed business Provimi for around 2 billion euros ($2.8 billion), people familiar with the matter said on Tuesday.

The valuation target is based on strong interest from other companies in the sector before the start of the sales process, which is in its early stages, one of the people said.

JP Morgan, which is soliciting offers for the business, declined comment, as did Permira and Provimi.

A Dutch paper had reported animal feeds group Nutreco NV NUTR.AS was preparing a bid for Provimi and was mulling financing options.

Het Financieele Dagblad said Nutreco, which has looked at buying Provimi twice before, is considering a share issue or a divestment to help fund the potential transaction.

SNS Securities analyst Richard Withagen questioned whether Nutreco would pay as much as 1.4 billion euros, the minimum takeover price cited by market observers in the report.

"I really have a hard time seeing Nutreco paying 1.4 billion euros for Provimi. They really should not pay more than 1 billion and the question is whether (Permira) wants to sell it for that amount," he said.

Permira bought Provimi at the height of the bull market in 2007 in a deal that valued the business at 1.7 billion euros.

Withagen added that although Provimi would be a good strategic fit, Nutreco has shown strong financial discipline in recent years, demonstrating also that it can assimilate bolt-on deals rather than take on a large acquisition such as Provimi.

A Nutreco spokesman reiterated the company had a war chest for acquisitions of between 500 million euros and 600 million but declined to comment on the report.

The company said at its annual shareholders meeting in March that Provimi would be a good fit.

Nutreco previously looked at buying Provimi in 2002 and 2007, but was outbid by private equity funds. (Reporting by Victoria Howley and Simon Meads in London, with Aaron Gray-Block in Amsterdam; Editing by Mike Nesbit and David Holmes) ($1=.7113 euros)

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