Centrale del Latte d’Italia could make bolt-on deals for fresh milk and yogurt producers
05 APR 2017
Italian dairy producer Centrale del Latte d’Italia [BIT:CLI] is looking to accelerate its product diversification through opportunistic M&A, Chairman Luigi Luzzati said.
The EUR 117.7m-turnover company was formed on 30 September 2016 via a merger between Centrale del Latte di Firenze (Mukki) and Centrale del Latte di Torino & C. Studio Chiomenti and Banca IMI advised on the deal, while KPMG acted as auditor, as previously reported.
Although management is still focused on consolidating the companies’ production and organisational processes post-merger, M&A remains a key growth driver, Luzzati said. Acquisitions will be made to gain distribution and cross-selling synergies and to reinforce the company’s product offering, he said.
Centrale del Latte d’Italia would prefer add-on acquisitions, he said, noting that ideal takeover candidates will operate in the Italian dairy industry. The company will buy mid-size companies, easily funded with in-house cash, he said.
It is primarily interested in buying fresh milk producers, and could be a sector consolidator, he said. The company kicked off sector consolidation when Central del Latte di Torino bought Mukki, which was the biggest target available in the Italian market, he said.
Italy’s fresh milk market is highly fragmented, Luzzati said, as 18.3% in the hands of private labels. According to a company presentation on the sidelines of the recent STAR conference in Milan, Centrale del Latte di Italia has a 7.3% share of the fresh milk market, compared to Parmalat’s [BIT:PLT] 23% and Granarolo’s 21.7%.
Yoghurt producers are also desirable targets, Luzzati said, noting that Centrale del Latte di Italia is trying to reinforce its presence in this niche by launching new products every year, including last year’s soya yogurt.
Centrale del Latte di Italia is also looking to diversify, he said, and is strengthening its beverage offering, for example introducing new drinks this year made from rice, soya and oats, and vitamin-enriched yogurt drinks for children and the elderly.
Now that Centrale del Latte d’Italia operates on the same scale as Granarolo and Parmalat, it could consider acquisitions anywhere in Italy, he said. It owns Liguria-based Latte Tigullio, Centrale del Latte di Vicenza, Maramao Salads and Fruits in Casteggio, near Pavia, and 50% of Odilla chocolate company in Turin.
In 2016, Centrale del Latte d’Italia generated EBITDA of EUR 2.9m and negative EBIT of EUR 1.6m.