Marr IPO is relatively disappointing

The IPO of Italian food distribution company Marr was priced last week with an oversubscribed book, though the deal was not quite as well received as some other recent transactions in the country, such as Italease, SAVE and Toro.

The IPO was marketed with a price range of €6.00–€7.85 for an entirely secondary base deal of 26.4m shares and a free float of 40%. Bankers said the deal differed from other recent transactions in that domestic accounts showed more interest and less price-sensitivity. Unsurprisingly, in view of the domestic nature of the company’s business, international names were not so prominent, and the overall book ended up around twice covered.

Pricing came in on June 16 at €6.65, in the bottom half of the range, for proceeds of €175.56m before the greenshoe. Bankers said the investment case was the market-leading position of the company and the attractive 4.9% dividend yield for 2006. The IPO price puts the company on a 2006 P/E of 15.4, but with no real listed comparables outside a few much larger companies in the US, the yield was probably more significant than multiple comparisons.

In addition, the food distribution sector is a very fragmented one in Italy, but Marr has a 28% market share in specialised wholesale.

It is more than five times larger than its nearest competitor and bankers said that the barriers were formidable to any firm looking to usurp Marr’s position.

Retail investors took around one-third of the deal. Geographically, the institutional tranche was placed 30% into Italy, 50% into the UK and around 10% with Reg S money from the US.

The selling shareholders were the Cremonini Group, which held 65.8% before the deal, as well as a group of other investors including Barclays Private Equity and Arca.

Cremonini holds about 55% following the deal, while the group of investors is reduced from 34% to around 5%.

Bookrunners were Banca IMI and Merrill Lynch. Senior co-lead was JP Morgan, while Banca Aletti and Akros were co-leads.