French-listed behemoth Elis weighs bid for Spotless Laundries

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There's a French behemoth weighing a bid for Spotless' up-for-sale commercial laundries business.

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The laundries business at Spotless is suffering from margin pressure.  Mario Borg

Street Talk understands the €4.1 billion, Euronext-listed Elis has been mulling making a play for the division, with the second round of the auction to get underway on Australia Day.

Spotless – controlled by Downer Group – mandated Sydney-based corporate VCA Partners earlier this year to run an auction for the laundries business, which was spruiked as Australia's No.1 player in linen.

It's fair to say VCA Partners isn't in any great rush to hurry the sales process along, especially with two weeks until Christmas. In fact, sources reckon slowing things down will allow trade interest to build and give the buyout firms a run for their money.

From where Street Talk sits, VCA would want the likes of Phil Cave's Anchorage Capital Partners – who bought commercial laundry and dry-cleaning business South Pacific Laundry in late 2018 – to take a look under the hood.

Potential bidder Elis has a long-standing working relationship with Deutsche Bank. The investment bank advised it during its £2.2 billion takeover of British textile maintenance service provider Berendsen in 2017.

So if Elis were to lob a bid, it'd be a safe bet that Deutsche would be on the ticket.

Elis generated €3.1 billion in revenue in 2018 and €985.6 million in earnings. The company operates in 28 countries, across 440 plants with almost 50,000 employees.

Spotless' pitch

Spotless Laundries meanwhile has 13 plants around Australia that are supported by a fleet of 275 delivery vehicles and five depots, according to its sale flyer sent out in October.

In that flyer, interested parties were told Spotless Laundries was expected to record $265.3 million in revenue and $59.1 million in earnings before interest, tax, depreciation and amortisation in the 2020 financial year.

Prior to tapping VCA Partners, Street Talk revealed Spotless had hired PwC to run vendor due diligence on the unit ahead of a potential sale.