Madrid, Apr. 13 - French retailers Carrefour SA and Auchan SA have been selected among the finalists in the auction of Caprabo, one of Spain's largest supermarket chains, according to a person familiar with the situation.
More than four non-binding offers out of a pool of 15 were picked earlier this week by Caprabo's advisors Morgan Stanley (MS) and local bank Invercaixa, and will get access to more detailed data on the company. Final bids for Caprabo are due by the end of May.
London-based private equity firm Permira and unlisted Spanish supermarket chain Grupo Eroski have also been selected, as well as another buyout firm, this person said.
Caprabo, which operates 569 stores around Spain and has a strong position in its home region of Catalonia, is believed to have set a price tag of around EUR1.5 billion.
However, the initial bids tendered were significantly below that figure, another person familiar with the matter told Dow Jones Newswires.
Caprabo is 80% controlled by three Catalan families: Botet, Carbo and Elias. The remaining 20% is in the hands of La Caixa, Spain's largest savings bank.
Industry experts say Caprabo has struggled with falling profit margins after it purchased several smaller rivals and embarked on an ambitious national expansion a few years ago.
Over the past two years, it has sold outlets and reorganized its store portfolio. The company posted a net profit of EUR7.5 million last year, on sales of EUR2.2 billion.
Earnings before interest, tax, depreciation and amortization, or Ebitda, for 2006 stood at around EUR85 million, according to people familiar with the situation. Caprabo doesn't publicly disclose its Ebitda figures.
Recent large private equity transactions in Spain have commanded a figure of around or slightly above 10 times Ebitda.
Caprabo is facing increased competition from larger rivals such as Mercadona, a supermarket chain based in the neighboring region of Valencia, in the east of Spain, and Carrefour.
Carrefour is already the market leader in Spain, where it owns no-frills franchise Dia, as well as hypermarkets and its Carrefour Express supermarkets.
However, international retailers have struggled to get a foothold in the mid-sized supermarket format, which is dominated by regional players, mostly family-owned companies like Caprabo.
Carrefour, Permira and Eroski declined to comment. Caprabo and Auchan officials weren't immediately available for comment.
Permira has made a series of purchases in the retail sector in Spain over the past few years.
It has bought fashion retailer Cortefiel SA and supermarket chain Dinosol, Spain's seventh-largest food retailer by revenue.