Tank & Rast still up for sale, but IPO ruled out
The German autobahn service area chain Tank & Rast, which is jointly owned by British private equity group Terra Firma and Germany’s RREEF Infrastructure Funds, is now officially up for sale for a reported €3.5bn. However, contrary to what we reported in these pages some months ago, the proposed stock market flotation as an exit for its owners is now thought to be off the table.
A report in German business daily Handelsblatt said the two joint owners were looking for a trade sale as early as this summer for the Bonn-headquartered service station and sanitary facilities chain, after a long and chequered history of ownership.
Up for sale is the Tank & Rast chain with 390 autobahn service areas, 350 petrol stations and 50 hotels, making it the largest service provider of its type in Germany. The group employs 600 directly, including 300 in its Bonn headquarters, and over 12,000 through its numerous franchise partners, in generating more than €3bn in annual revenues.
The Guy Hands-led Terra Firma bought Tank & Rast in 2004 for €1.1bn from Lufthansa and two funds belonging to Apax and Allianz, six years after being privatised by the German government. In 2007 the private equity group attempted to sell the chain, and ended up selling just below 50% to Deutsche Bank’s alternative investments subsidiary RREEF.
The group was forced to take on hefty debt during the financial crisis, and ended up issuing very high-priced bonds to service its €2.1bn debt, including some which are committed to paying interest of up to 6.75%. The sticky nature of these commitments have made the consortium’s financial prospects much more difficult, so much so that the mooted IPO is no longer feasible, according to JP Morgan and Deutsche Bank, who are advising on the deal.
According to the report, other potential suitors have also been turned of by the group’s liabilities. However, four bidding groups are said to be negotiating with the group – a consortium of insurer Allianz, Canadian infrastructure group Borealis, the Abu Dhabi Investment Authority, and MEAG, an investment subsidiary of Munich Re. Also in the frame are two groups assembled by Australian banking group Macquarie, along with the Singapore wealth fund GIC, and the Ontario Teachers Pension Fund.
All bids so far are thought to have come in at under €3bn, while the owners are looking for €3.5bn. Although Tank & Rast is expecting to boost operating profit from €235m to €405m this year, it looks as if they may have to make concessions on their target price.