October 31, 2018 / 6:55 PM / 17 days ago

Owners of Italy's Esselunga seek investors to bankroll buyout plan: sources

LONDON/MILAN (Reuters) - The majority owners of Italian supermarket chain Esselunga are seeking to team up with long-term investors to take full control of the business and squeeze out two of the family heirs, three sources familiar with the matter said.

FILE PHOTO: A man pushes shopping carts outside Esselunga supermarket in Pioltello near Milan, northern Italy, September 13, 2016. Picture taken on September 13, 2016. REUTERS/Flavio Lo Scalzo/File Photo

The retailer, which ranks as Italy’s fourth biggest supermarket chain, has long been locked in a family dispute following the death of founder Bernardo Caprotti in 2016.

Based in Milan, Esselunga is 70 percent owned by Caprotti’s second wife Giuliana Albera and their daughter Marina while the remaining 30 percent is held by Caprotti’s two children from his first marriage, Giuseppe and Violetta.

Esselunga named Marina Caprotti as its vice-president last year while her mother Giuliana became honorary president and her husband Francesco Moncada di Paterno’ got a seat on the board.

Following her father’s death, Marina and her mother were granted a call option to buy out the minority investors within four years.

The sources said they are actively working on the plan and recently tasked London-based advisory boutique Zaoui & Co with finding investors that could bankroll the deal, the sources said.

Marina, the 40-year old scion, is mainly targeting international investment funds with a long-term commitment and a passive approach, one of the sources said, adding she would retain full control of the company’s governance.

While traditional private equity funds have been discarded, sovereign wealth funds may fit the bill, the source said.

An initial public offering (IPO) had initially been considered as a way to lure investors and reach a mutual agreement on the company’s valuation but the plan has been shelved for the time being, the sources added.

A spokesman for Esselunga told Reuters that the company had begun a process that would give it “the ability to be listed at the appropriate time”. He declined further comment.

The relationship among Caprotti’s children has always been tense and the company’s valuation has been a key point of contention between the three siblings, the sources said.

At the last meeting of shareholders of the Supermarkets Italiani holding, which controls all of Esselunga, Violetta was denied a dividend payment while Giuseppe chose not to attend, according to the AGM’s minutes.

Both sides of the family agreed last year to merge the supermarket chain with Villata Partecipazioni, the holding entity of its real estate assets.

Esselunga reported revenues of 7.75 billion euros ($8.76 billion) in 2017 with an adjusted core profit of 648 million euros and net financial debt of 848 million euros.

($1 = 0.8846 euros)

Reporting by Pamela Barbaglia in London and Elisa Anzolin in Milan; Editing by Kirsten Donovan

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