Sodexo EXHO.PA has entered talks with buyout firm CVC CVC.ULon a deal about its restaurant check unit, French business daily Les Echos reported on Monday 25 April, citing sources close to the talks.
Both CVC and Sodexo declined to comment.
Sodexo is prepared to sell 20% to 30% of the unit, which could be valued at as much as €4 billion to CVC, the report said.
According to the report, Sodexo had approached other private equity firms including Bain Capital and Silver Lake, but these had considered the price too high and walked away from the deal.
Analysts at Morgan Stanley and AlphaValue found the €4 billion valuation in line with estimates, but Morningstar's Michael Field said that he doubted a deal would come through after the company apparently moved to consolidate control and named the founder's daughter, Sophie Bellon, its new CEO.
"Given this, it would be strange for them to then give up some control of their most profitable business to a UK private equity firm," he said.
Les Echos said the deal would result in CVC taking a stake in the business, providing Sodexo, whose shares have lost 16% of their value since mid-February, with needed cash.
Sodexo shares rose approximately 4% after the report to over €75.2 each. The stock was up 1.5% at 1445 GMT on Monday 25 April, while the French blue-chip index traded down 1.3% .FCHI.
Sodexo's Benefits & Rewards Services unit, which supplies employee meal passes and vouchers, had over the six months that ended 28 February brought in approximately 4% of sales, but a fifth of its core profits.
Sodexo had earlier this month cut its guidance citing impact from the coronavirus pandemic and the war in Ukraine, which prompted it to cut off investments in Russia. It said that it had already sold off the division's Russian operations.
Earlier-Than-Expected Termination Of Contracts
Work-from-home and event closures during the peak of the pandemic forced caterers to adapt their digital offerings, but Sodexo has also been hit by an earlier-than-expected termination of contracts with COVID-19 testing centres in the United Kingdom.