* Rothschild mandated to organise auction - sources
* Unit may be valued at about 200 million euros - sources
* Bilfinger targets peers as potential buyers - sources
By Arno Schuetze
FRANKFURT, May 30 German engineering and
services group Bilfinger has started the sale of its
construction business as it moves away from a business model
vulnerable to price wars in the building sector, sources
familiar with the transaction said.
Investment bank Rothschild, which is organising a possible
deal of around 200 million euros ($272.3 million), has sent the
first information packages to potential buyers, the sources
said. Initial bids will probably be due in July, the sources
Bilfinger is looking for possible buyers among construction
and engineering companies such as Strabag, Porr
, Skanska, Vinci and Bouygues
, the sources added.
Bilfinger, Rothschild and the potential bidders declined to
Bilfinger wants to focus on providing higher-margin
engineering and services for industrial facilities, power plants
and real estate. It said earlier this month it planned to sell a
significant part of its construction business within a year.
The division - heavily exposed to Germany and other European
countries - builds steel bridges, tunnels, subways and urban
rail lines as well as noise protection walls. In the field of
energy, it makes foundations for offshore wind parks and
overhead power lines.
While selling activities with 800 million euros in sales,
Bilfinger is keeping smaller construction businesses such as
those involved in the offshore wind and power grid sectors.
Strabag Chief Executive Thomas Birtel said recently that
Strabag would look at the asset, adding that a potential bid
would probably not be very competitive due to the large overlap
of the businesses between the two firms.
Vinci Chief Executive Xavier Huillard has said the group is
targeting acquisitions mainly in construction of airports,
but also in specialized civil engineering and for the oil and
Bilfinger's construction unit posted EBITA (earnings before
interest, tax, depreciation and amortisation) of 1 million euros
in 2013, compared with 25 million euros the year before, hit by
its loss-making German road construction unit and Polish
The company sold the German unit in the fourth quarter last
year and has said it is overhauling the Polish business.
While Germany's residential construction market has picked
up in the past year, construction of public-sector commercial
properties has been broadly flat.
Analyst Gianmarco Bonacina of Equity SIM Research said he
expected Bilfinger to sell the unit at a value equivalent to 30
percent of its sales.
"I currently assume that Bilfinger could sell the business
for an enterprise value of 240 million euros," he said.
Bankhaus Lampe analyst Marc Gabriel said he estimated the
enterprise value of the construction division - including the
parts that Bilfinger is keeping - at 255 million euros, based on
2015 estimated earnings before interest and tax (EBIT) of 41
A third analyst, who declined to be identified, said he
estimated the sale to reap net proceeds of around 100 million
($1 = 0.7345 Euros)
(Additional reporting by Marilyn Gerlach in Frankfurt, Gilles
Guillaume in Paris, Sven Nordenstam in Stockholm, Angelika
Gruber and Georgina Prodhan in Vienna; editing by Jane Baird)