CVC Capital Partners, currently one of Europe’s most active private equity investors, is set to make a move into Spanish retail with the purchase of El Árbol, the underperforming Spanish supermarket chain.
Reports in the Spanish press suggest that CVC has entered into exclusive talks with El Àrbol’s owner, French supermarket chain Casino, and has until the middle of October to table a firm offer for the business.
El Àrbol has suffered a sharp downturn in performance over the past three years, reporting losses in excess of E120m and a ten per cent drop in turnover during the period. The business is currently involved in legal proceedings with creditors regarding debts totalling E65m. As part of its ongoing difficulties, the supermarket chain has been forced to close ten of its 600-plus stores across Spain.
CVC has declined to comment on whether it is going to make an offer, but the firm is said to be in the process of undertaking a lengthy due diligence process as it decides whether to proceed with a bid. El Àrbol’s creditors have said that they will pursue a buyer for owed monies if it acquires the chain.
If completed, the transaction would be the latest in a series of Spanish deals completed by CVC this year as it consolidates its position in the Spanish buyout market. The London-based firm launched in Spain in 1997, and to date has invested in excess of E1.5bn in Spain, including the recent E577m purchase of power assets from Iberdrola, which was is one of Spain’s largest private equity transactions. The firm is also in the final round of bidding for Trasmediterranea, a state-owned passenger ferry company which is valued at around E240m.