Cleaning giant ISS explores new LBO – sources

* ISS, owned by EQT and Goldman since 2005, worth some $7bln

* Trio announced reviewing options, including IPO, in August

* Sources say hefty “secondary buyout” being explored

By Quentin Webb

LONDON, Oct 27 (BestGrowthStock) – Goldman Sachs (GS.N: ) and Sweden’s
EQT (EQT.N: ) are exploring selling ISS [ISSHOI.UL] [ISSFN.UL],
their $7 billion Danish cleaning giant to fresh private equity
investors, sources said, in what could be Europe’s biggest
buyout since the credit crisis.

People familiar with the matter said the duo, wich are
officially considering “strategic options” including a listing
of ISS, have been in contact with major private equity firms and
banks about a possible deal.

Any so-called secondary buyout would be challenging, given
the equity and debt funding required, and would probably require
several buyout firms to club together, which does not yet appear
to have happened, they added.

But the fact such a takeover is being discussed illustrates
how rapidly private equity dealmaking is recovering — aided by
a booming high-yield bond market and banks’ increasing
willingness to extend leveraged loans.

With an enterprise value of nearly 40 billion Danish crowns
($7.4 billion), on Jyske Bank estimates, ISS is worth half as
much again as 2010’s largest European buyout — Canadian
investors’ $4.5 billion takeover of Britain’s Tomkins Plc.

Two months ago, ISS and its owners, which bought it in 2005,
confirmed they had hired Goldman’s own bankers and Morgan
Stanley for “a strategic review process, which includes
considering an initial public offering” (IPO).

The size of the possible leveraged buyout (LBO) means only
the largest firms, such as Advent International, Bain Capital,
Blackstone (BX.N: ), The Carlyle Group [CYL.UL], KKR (KKR.N: ), TPG
[TPG.UL] and Warburg Pincus [WP.UL], are likely to contemplate a
deal.

Apax, BC Partners [BCPRT.UL], Cinven [CINV.UL], and Nordic
Capital are among those who have previously considered buying
ISS, one of the people said.

“We are evaluting strategic alternatives for ISS. This could
result in a listing of the company or change in ownership,” an
ISS spokesman said, but declined to comment further.

EQT and Goldman Sachs (GS.N: ) declined to comment. The
private equity firms either declined to comment or had no
immediate comment.

SCHOOL MEALS

ISS says it is one of the world’s largest providers of
facility services, employing nearly half a million people in
about 50 countries who clean offices, cook school meals, guard
buildings and operate call centres.

It competes with Britain’s G4S Plc (GFS.L: ) and Compass Group
Plc (CPG.L: ), France’s Sodexho SA (EXHO.PA: ), and Sweden’s
Securitas AB (SECUb.ST: ).

It made pro-forma adjusted earnings before interest, tax,
depreciation and amortisation (EBITDA) of 4.9 billion crowns in
the first half of this year, on revenues of 36.2 billion.

It is unclear how much fresh leverage could be piled on the
company, given net debt already totals about 6.6 times EBITDA.

Analysts and bankers say buyout firms may also be looking at
purchasing Compagnie de Saint Gobain SA’s (SGOB.PA: ) 4 billion
euro ($5.52 billion) glass-bottle unit, which would pre-empt
another big European IPO. [ID:nLDE69D1PZ]
($1=5.402 Danish Crown)
($1=.7242 Euro)
(Reporting by Quentin Webb; Editing by Karen Foster)

Cleaning giant ISS explores new LBO – sources