January 21, 2015 / 8:59 PM / 2 years ago

UPDATE 1-Funds line up $1.7 bln bids for drinks bottler Refresco Gerber - sources

3 Min Read

(Adds more comment by sources, details on Refresco Gerber)

By Pamela Barbaglia and Martinne Geller

LONDON, Jan 21 (Reuters) - Dutch soft drinks bottler Refresco Gerber has attracted bids from three private equity funds valuing the business at around 1.5 billion euros ($1.74 billion), sources familiar with the process said.

PAI Partners, Pamplona Capital Management and Platinum Equity have emerged as the only bidders left in the second round of an auction, with a late February deadline, the sources said.

The company, which bottles drinks for grocers like Tesco and brands like Del Monte and Innocent Smoothies, expects to fetch a multiple of seven to eight times its core earnings of around 200 million euros, one of the sources said.

Its adviser JPMorgan aims to wrap up the process in around a month, two of the sources said.

A spokesman for PAI declined to comment while representatives at Refresco Gerber, Pamplona and Platinum were not immediately available for comment. A spokeswoman for JPMorgan declined to comment.

Refresco, based in Rotterdam, has annual revenue of around 2 billion euros and employs over 4,700 people in nine countries including Germany, France and England.

The sale, which was launched last year as a "dual-track" where companies weigh both a sale and a float, has failed to draw interest from industry peers, two sources said, adding that a series of private equity funds have been put off by Refresco's "rich" valuation.

One of the sources believed that plans to list the business in Amsterdam could be resumed if private equity bids are not satisfactory.

Refresco Gerber, which was formed last year through the merger of beverage manufacturer Refresco and bottling company Gerber Emig, operates in the private label industry as it manufactures products to be sold under another brand.

The company, backed by private equity firm 3i Group and other investors, is exposed to volatility in costs of commodities such as oil and juice.

Bottling private-label soft drinks, or those sold under a retailer's own label, is not hugely profitable since the drinks are often sold more cheaply than branded competitors.

Refresco's North American peer, Cott Corp, in November agreed a $1.25 billion deal to buy a U.S. bottled water and coffee distributor to expand beyond soft drinks and juices and to widen its client base. It has posted falling sales for 11 straight quarters.

PAI has been active in the private label industry where it acquired ice cream manufacturer R&R Ice Cream in 2013. ($1 = 0.8636 euros) (Additional reporting by Anjuli Davies and Freya Berry; editing by Susan Thomas)

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