November 8, 2012 / 5:46 PM / in 5 years

RLPC-Handful of PE firms battle for B&M -bankers

LONDON, Nov 8 (Reuters) - Blackstone, BC Partners and KKR are among a handful of private equity firms left in the running for discount retailer B&M, banking sources said on Thursday.

Rothschild is running the sale process for a significant stake in the company, which has a price tag of 850 million pounds ($1.36 billion).

The trio of private equity firms made it through to the second round of the auction process after first round bids were submitted last week, several bankers said. Private equity house Clayton Dubilier & Rice has also made it through, one of the bankers said.

Cinven is not going through to the next phase. Apax & CVC were close to the process, several bankers added.

Blackstone, BC Partners, Cinven and KKR declined to comment and Clayton Dubilier & Rice could not be reached for comment.

Bankers are putting together debt packages of around 400 million pounds ($639.50 million) to back a buyout or 4 to 4.5 times B&M’s approximate 90 million pound EBITDA.

Debt will be provided either all through senior leveraged loans or through a combination of senior leveraged loans and mezzanine debt. Leverage could be pushed to around 6.5 to 7 times after taking into account the store’s leasing agreements, which is concerning some bankers.

B&M, owned by brothers Simon, Bobby and Robin Arora, has over 290 stores throughout England, Scotland, Wales and Northern Ireland and employs over 10,000 staff. The sale could catapult the three among the richest families in the UK.

The Liverpool-headquartered company sells a range of products including toys, furniture and foodstuffs and has over two million customers a week, according to its website.

The business has attracted a lot of interest from private equity firms as the discount retail sector is seen as an attractive business to own in the current difficult economic climate where people have been tightening their belts.

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