Gategroup to buy European ops of Lufthansa's LSG unit - sources (updated)
26/11/2019 12:08
(Adds background, details)
By Arno Schuetze and Klaus Lauer
FRANKFURT, Nov 26 (Reuters) - Switzerland's Gategroup is
nearing a deal to buy the European operations of Lufthansa's
LHAG.DE LSG catering unit, which the carrier has offered for
sale as it struggles with low margins in a competitive market,
three people close to the matter said.
An announcement of the deal is expected after a meeting of
Lufthansa's supervisory board on Dec. 3, two of the people said.
Lufthansa and Gategroup declined to comment.
Airline catering company Gategroup's offer topped that of
industry rival Do&Co DOCO.VI and the two had been the last
remaining contenders in a long drawn out auction, the sources
said. Do&Co had no immediate comment.
Gategroup is owned by Singapore state fund Temasek and Asian
investment firm RRJ Capital, who took over the company in
several steps from Chinese conglomerate HNA. Gategroup operates
the Gategourmet brand.
The catering business is challenged by a large number of
locations it serves, high staff costs and exposure to currency
exchange rates, Lufthansa's Chief Executive Carsten Spohr said
earlier this year.
Union verdi had urged Lufthansa to scrap the sale or at
least to make sure that jobs and employee rights are preserved
in any deal.
The sale of LSG's European operations will be followed by an
auction for its international business, which is expected to
start in the first quarter, the sources added.
In its third quarter report, Lufthansa had said the formal
sales process for LSG's European catering activities and the
negotiation on a follow-on catering contract was progressing,
with results expected year-end.
While details about the purchase price did not yet emerge,
company sources had said in the past Lufthansa may receive just
a small amount of money for LSG's European operations.
In its financial report, Lufthansa had said that assets held
for sale worth 393 million euros and liabilities worth 639
million relate to the planned disposal of its European catering
activities.
In the first six months, Lufthansa's catering revenues
increased by 4% to 1.6 billion euros, while earnings before
interest and tax contracted by 18% to 33 million.
(Reporting by Arno Schuetze and Klaus Lauer; editing by Thomas
Seythal and Alexandra Hudson)
((arno.schuetze@thomsonreuters.com; +49.69.7565.1197; Reuters
Messaging: arno.schuetze.reuters.com@reuters.net))