French caterer Elior wants bids for Areas by end-January - sources

By Jean-Michel Belot and Francesca Landini

PARIS/MILAN (Reuters) - France's Elior wants bids for its Areas business, which focuses on railways and motorway catering, to be submitted by the end of January, a source familiar with the situation told Reuters.

Elior <ELIOR.PA>, which is Europe's third-largest catering group, hopes to raise 1.5 to 2 billion euros (1.8 billion pounds) from the sale of Areas, whose 1.8 billion euro 2017-18 revenue accounted for nearly a third of its sales, the source said.

In November Elior said it planned to sell Areas to create value and boost growth, and around 10 private equity funds - including Carlyle, KKR, Lone Star and Blackstone - are considering making a bid it, the source added.

A second source said Italian catering group Autogrill <AGL.MI> is also considering making an offer, but French group Lagardere <LAGA.PA>, which had earlier shown an interest in Areas, said last month it had decided not to bid.

Elior has given a mandate for the deal to U.S. investment bank Morgan Stanley, <MS.N>. French banks BNP Paribas <BNPP.PA> and Credit Agricole CIB (CACIB) <CAGR.PA> are also involved with the sale process, the source said.

Analysts value Areas - which has core earnings of about 200 million euros - at 7.5 to 10 times earnings before interest, tax, depreciation and amortisation (EBITDA) compared to 8 to 11 times for Autogrill or Britain's SSP Group Plc <SSPG.L>.

With 2017-18 revenue of 6.69 billion euros, Elior is well behind Britain's Compass <CPG.L> and French Sodexo <EXHO.PA> which each have revenues that are more than three times this.

Shares in Elior have more than halved from mid-2017 highs following several profit warnings and the firm's market capitalisation has fallen to 2.56 billion euros.

The company's return on equity, at 2.25 percent, is the lowest in the Thomson Reuters Europe Restaurant and Bars index. <.TRXFLDEUPUREST>

(Reporting by Jean-Michel Belot in Paris and Francesca Landini in Milan; Writing by Geert De Clercq; Editing by Richard Lough)