Divella to consider strategic investors to strengthen international presence – CEO

16 March 2021 - 04:46 am UTC

by Valentina Caiazzo and Micaela Osella in Milan

Divella, the Italian pasta maker, could bring in strategic investors to power its international expansion, CEO Vincenzo Divella told Mergermarket.

 

Divella would favour an international strategic partner, especially a US-based company, he said. European players would be less strategic, as Divella already has sales channels there, he noted.

 

Desirable investors would be multinational groups active in the food sector, with a particular interest in pasta and preserves and a well-structured distribution network in North America, he said. This would help Divella better penetrate the US market, and build business synergies, he said.

 

The company is not working with advisors, but would listen to those able to present interesting opportunities, Divella said. 

 

Divella’s management recently met with advisors pitching for a sellside mandate, three sources familiar with the situation said. Two of the sources suggested that Rothschild would be the frontrunner, due to its familiarity with the sector.  

 

Rothschild has not been involved in this deal, a company spokesperson said. 

 

Rothschild is reported to be handling Ebro Foods’ [BME:EBRO] sale of French pasta business Panzani, as anticipated by Mergermarket in February. 

 

The launch of Divella’s auction is not imminent, but it could take place in the coming months, the sources said. There is strong interest in assets like this, which have proven their resilience in the past year, two of the sources said, pointing to the market appetite for competitor Panzani. 

 

Divella has reached a good point in its international development so it is a good time to open its shareholder base, these sources said. The company sounded out private equity interest in the company at the end of 2019, but the auction’s launch was postponed due to the COVID-19 pandemic, they added. 

 

Given its heritage, size and brand-awareness, Divella could receive interest from large private equity firms with a background in the food industry, such as Ergon, Towerbrook, CapVestBC Partners and PAI Partners, one source said, adding that this dossier could achieve a sale multiple of about 12x-14x EBITDA on the back also of the abundant liquidity around. 

 

The company generated EUR 30m EBITDA last year, the sources said. Divella described it as one of Italy’s two largest pasta producers, generating EUR 300m revenue.

 

The Italian pasta and preserves market slowed down in the second half of 2020, after performing well during the spring lockdown when stockpiling fostered a growth in consumption, Divella said. The company saw sales increase by 40% year on year in the 2020 spring quarter, he added. 

 

The downward trend has continued into January and February 2021 this year on the back of prolonged restaurant closures in most of Italy, he said, and Divella has seen an ongoing progressive drop. However, its exports – especially to North America, China and the Middle East – have remained steady, partially making up for the firm's domestic loss, he said, and the company now aims to further develop its international sales.

 

International growth cannot be achieved just by allocating internal staff resources, but requires a stronger, more widespread distribution structure in the targeted market, he said, which could be built up via strategic partnerships. Divella has never properly searched for strategic partners before because it did not need to, but the coronavirus pandemic has made management seriously consider this option, he said. 

 

Last year, Divella consolidated its presence in Australia by acquiring a local food distribution platform, he said, declining to name it, in addition to the Australian food distributor it bought three years ago. These deals have allowed the company to bring its pasta to the local market, and has increased its local market share, he said.

 

Similar opportunities are very rare, Divella noted, adding that the company is not looking for further acquisitions. 

 

Divella has completed Borsa Italiana’s Elite programme, which helps companies prepare for a listing or other growth options, he said. Even so, an IPO is currently not an option, as the company does not need capital, but rather strategic partnerships to grow overseas, he said.

 

He described De Cecco as Divella’s domestic peer.