By Pamela Barbaglia, Arno Schuetze and Andrés González
LONDON (Reuters) - U.S. buyout firm Lone Star has emerged as the frontrunner to buy the German building materials business of France's Saint-Gobain in a deal valued at up to 400 million euros ($450 million), four sources familiar with the matter said.
Lone Star is using its Nordic building materials supplier Stark as an acquisition vehicle to purchase the unit, known as Raab Karcher, the sources said.
Stark was recently admitted to the second round of an auction process which kicked off in January, the sources said.
Private equity fund Platinum also made it to the final stages of the process, while U.S. rival Advent initially expressed interest but subsequently dropped out, they said.
The sources said Lone Star is ahead of Platinum as it has a more attractive business proposition due to the synergies it would extract by combining Stark and Raab Karcher.
The two funds are still carrying out due diligence ahead of a deadline for final offers in early May, the sources said, cautioning that no deal was certain.
Saint-Gobain and Lone Star declined to comment while Platinum was not immediately available.
The sale, led by Goldman Sachs (NYSE:GS), is expected to wrap up next month and could value the unit at between 300 million and 400 million euros, two of the sources said.
Raab Karcher has annual earnings before interest, tax, depreciation and amortization (EBITDA) of about 40 million euros and is expected to fetch a multiple of no more than 10 times its EBITDA.
The unit reported revenues of almost 2 billion euros in 2017 but its margins are squeezed amid fears of a looming recession that could have a painful impact on building materials specialists.
Saint-Gobain put Raab Karcher on the block in November as part of a plan to sell non-core businesses with total revenues of 3 billion euros under a strategic overhaul overseen by new chief operating officer Benoit Bazin.