The deal is an exit for majority shareholder BS Private Equity (57.2%) and co-investors Arca Impresa Gestioni (21.79%), Arca Merchant (5.45%) and MPS Venture (13.62%.) Carapelli’s management is also selling the remaining 1.95% of the business. The transaction returns an IRR of approximately 28% and a cash multiple of approximately 2.5 times. Legal adviser for the sellers is Studio De Biasi & Rapini.
BS Private Equity led the investors’ consortium, which backed the €50m deal in June 2002. The investment was made from IPEF III, a €300m fund raised at the end of 1999 and is the fund’s tenth divestment. Antonio Perricone of BS Private Equity, who worked with CEO Stefano Lonangeli (CEO) and Riccardo Sarti (CFO) to turn the business around, said: “What orignially attracted us to the brand was Carapelli’s great potential as one of the emerging global brands in a growing sector and probably neglected by its former parent, the chemical and food conglomerate Montedison group.”
He explains how the company was able to evolve under private equity ownership: “We granted management more operational independence, followed their capex recommendations and restructured the key
US joint-venture with Hormel Corp.” A particular challenge he mentioned was the restructuring of the US operations and having to cope with a sharp increase in raw material prices.
As far as exits in the Italian market are concerned, this one was not typical, says Perricone. “The buyer was very aggressive and timely. The company is highly appealing for a number of players, but an auction would have been possible only in 2007, on the expectation that the raw material prices will stabilise in 2006.”
A family business established at the end of the nineteenth century in Tuscany, Carapelli is one of the most prominent Italian brands of extra virgin olive oil, olive oil and seed oil. Carapelli was also the first company to market extra virgin olive oil to the supermarket chains in the 1960s. The company’s management, led by Stefano Leonangeli, has focused over the years on product research and quality. Over the last few years its export business has grown constantly, mainly in the fast-growing US market where Carapelli holds a market share of around 8%. Other important markets are France, the UK, Canada, Belgium and Austria.
BS Private Equity has been active in MBO and MBI investment since 1988. The firm is currently investing IPEF IV, a €550m closed-end fund targeted at Italian companies. Over the last 17 years, BS Private Equity has completed 62 direct investments for a total equity investment of around €710m, as well as more than 75 add-on acquisitions from its portfolio companies. The firm’s average equity investment per deal increased from €4m in IPEF I to €8m in IPEF II, €15m in IPEF III and reaching €30m in IPEF IV.
In the first nine months of 2005, BS Private Equity completed two acquisitions (IP Cleaning and Cast Futura) and three divestments (Bonna Sabla, Logic Control, and Digitek), as well as two significant add-on acquisitions and a joint venture for its portfolio companies.