A new M&A 100% made in Italy. It has just happened in the tomato sauce business. La Doria Group, founded 60 years ago and currently a market leader in the manufacture of tomato-based products, canned vegetables and fruit juices, has signed a € 65.2 million deal for 100% of shares in the Pa.fi.al Group, which owns the companies Delfino and Althea. This deal will be both financially positive and highly strategic for La Doria, allowing them to strengthen their position as a key player on the international private label market.
The company will be acquired with a substantially reduced debt situation (€ -1.9 million at 30/06/2014). The purchase price will be a sum of around 40% of total expenditure, obtained from existing liquidity, with the remainder financed by Italian bank Intesa Sanpaolo.
The deal will solidify La Doria Group’s position as a leading provider of private-label products to the European market. Working within their existing food and beverage sectors, they will be able to offer large scale distributors a complete portfolio of products at a high level of service, with a positive knock-on effect on business margins. La Doria would also like to expand further into additional markets, such as the United States, where there is currently a huge demand for authentic Italian products.
Pa.fi.al Group, which has 2 production plants in Parma (Althea) and Acerra-Naples (Delfino), currently boasts an ample product portfolio, with its core business being ready-made pasta sauces inspired by traditional Italian recipes. These include tomato-based, meat-based, pesto and white sauces, which are manufactured primarily as private-label products for international large-scale distributors. Exports make up 73% of the company’s revenues, with the majority going to Germany, France, Belgium and Australia.
Furthermore, the company is financially secure. Sales revenues generated by Pa.fi.al Group in financial year 2013 totalled € 71.7 million, 93% of which came from private-label products and 7% from in-house brands. The group’s gross operating margin was equal to € 8.2 million, with net profits at € 3.6 million. The company is highly profitable, with an EBITDA of 11.4%. Forecasts for 2014 indicate revenue growth and further improvement in operating margins compared to 2013. These predictions are well supported by the financial results at 30 June 2014. La Doria’s ceo, Antonio Ferraioli has this to say on the deal: “We are extremely happy about the acquisition of Pa.fi.al Group, which represents a significant step forward in terms of our expansion strategy into compatible market sectors. It will allow us to reposition our product offering to include non-seasonal products that have a high-added value, thus increasing our operating margins. We are positive that this deal will allow La Doria Group (who closed out 2013 with a turnover of € 604.4 million, of which 90% came from private-label sales) to lay solid foundations for a future of continued expansion in both the domestic and international markets”.
