(Reuters) -Elior Group's biggest shareholder Derichebourg will double its stake in the French caterer to 48.4% and take operational control in a deal that will merge their services businesses, Elior said on Tuesday.
Elior shares jumped 5.5% while Derichebourg stock fell 1.6% on news of the proposed deal under which Elior will acquire Derichebourg's Multiservices (DSM) division.
Europe's third biggest contract caterer said Derichebourg's Chief Executive Officer Daniel Derichebourg will be appointed chairperson and CEO of Elior upon closing of the transaction.
"Derichebourg will own 48% of Elior but will effectively control it with Daniel Derichebourg to step down from his eponymous group and become chairman and CEO, and will get to appoint 5 directors", Bernstein analysts said in a note.
After being hit by COVID-19 lockdowns, Elior, like peers Compass and Sodexo (EPA:EXHO), is renegotiating rates and supplier pacts, reining in costs and cutting menu options to cope with rising energy and food prices.
The DSM acquisition, which is subject to Elior shareholders' approval, will result in a consolidated 2021-2022 revenue of 5.23 billion euros ($5.54 billion) and approximately 134,000 employees.
Under a memorandum of understanding (MoU) signed by the groups, Elior would acquire DMS in exchange for new Elior shares issued to Derichebourg at 5.65 euros per share, representing a premium of 119% or 128%, to the last trading day and the one-month average share price prior to rumours.
Elior's CEO Bernard Gault said in a call with journalists that the acquisition ends the strategic review of the group, adding that no further operations were planned.
The acquisition has significant potential value creation with at least 30 million euros in run-rate EBITDA synergies and a double-digit positive impact on EPS as soon as FY 2024, Elior said in a statement.
"Overall this deal does fix many of the issues that surround Elior," Bernstein analysts said, pointing to increased scale, higher margins and better balance sheet.
Derichebourg's Multiservices division runs a range of businesses from managing buildings to human resources activities such as training and recruitment.
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