Buyout Firm CVC Capital Vies With CD&R for Bilfinger

(Bloomberg) -- Private equity firm CVC Capital Partners has joined the race for German industrial services provider Bilfinger SE, according to people familiar with the matter.

It’s competing with rival buyout firm Clayton Dubilier & Rice, whose interest in Mannheim-based Bilfinger prompted other suitors to make approaches, the people said, asking not to be identified because discussions are private.

Bilfinger’s two largest investors, which include Swedish activist Cevian Capital AB, would likely welcome a sale after the company’s stock slumped 35% this year. It closed Friday at 22.50 euros, giving Bilfinger a market value of about 995 million euros ($1.2 billion). ENA Investment Capital, which boosted its stake this month, has urged the firm to explore asset sales.

Deliberations are still at early stage and may not lead to a deal, the people said. Other suitors could still emerge, they said. Representatives for Bilfinger, CD&R and CVC declined to comment.

Bilfinger is working with an adviser after receiving takeover approaches, Bloomberg News has reported. Chief Executive Officer Thomas Blades said in an interview last week that the company is “not putting itself up for sale,” while acknowledging that buyout firms reached out for talks.

Blades, who took over as CEO in 2016, has been trying to reinvent Bilfinger as a focused industrial services company by cutting costs, boosting margins and focusing on key markets. Once one of Germany’s biggest builders, Bilfinger continues to battle a low valuation, making it a longtime take-private candidate.

Hurdles to any deal include securing affordable financing as well as managing the business risks related to the pandemic slowdown and energy industry exposure. Buyouts of listed companies are also generally difficult in Germany due to takeover rules protecting minority investors.

Some suitors are considering acquiring Bilfinger, growing the business through acquisitions and eventually seeking a listing of the larger entity, people familiar with the matter have said.

They could use proceeds from the sale of Bilfinger’s remaining stake in facilities manager Apleona Group GmbH. Apleona’s controlling shareholder, private equity firm EQT AB, is considering a sale or listing of the business that could value it at nearly 2 billion euros, Bloomberg News reported in September.

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