It’s official. BC Partners and Bain Capital have signed an agreement that will sanction the entry of BC Partners in the capital of the Fedrigoni group alongside the current majority shareholder Bain Capital with the Fedrigoni family and the management who will retain a minority stake.
The confirmation came this morning with a joint press release from Bain Capital and BC Partners and a press release from Nomura, which supported BC Partners and Bain Capital by participating in the financing of the transaction that involves the issue of a bond. According to Bloomberg reports this morning, the operation will initially be financed through a 1.18 billion euro bridge loan made available by Goldman Sachs, BPER, Intesa Sanpaolo, Morgan Stanley, Nomura, Banco Santander and Unicredit.
Nomura also advised BC Partners as lead financial advisor together with Canson Capital Partners. BC Partners was also advised by JP Morgan, Afry Capital, White & Case, PwC, Facchini Rossi Michelutti Law Firm and Bain & Company. As for Bain Capital and Fedrigoni, they were joined by Rothschild, Morgan Stanley, Latham & Watkins, Pirola Pennuto Zei and Associates, Kirkland & Ellis, New Deal Advisors and Bain & Company. Finally, Goldman Sachs acted as advisor to the newco Fiber Bidco through which the acquisition will be conducted, which is expected to be concluded by the end of the year.
The rumors have been going on for days and again yesterday Reuters had specified that the operation involves the sale of 100% of the paper group with BC Partners which buys about 50% and Bain Capital which reinvests with a new fund. BC Partners’ offer so beat those of competing funds Partners Group, Onex and Brookfield.
We recall that Bain Capital had acquired a 90% stake in Fedrigoni back in December 2017 based on a 650 million euros enterprise value, with the Fedrigoni family who retained a minority stake (see here a previous article by BeBeez).
The new operation would instead take place on the basis of an overall valuation of 3 billion euros for Fedrigoni, which is the world’s leading player in the production of high value-added specialty papers for luxury packaging and other creative applications, and leader in the world of premium labels and self-adhesive materials. The EV figure in the upper part of the range of 2.5-3 billion, assumed in recent months, on the basis of an expected pro-forma ebitda for 2022 of at least 250 millions, taking into account this year’s acquisitions (see here a previous article by BeBeez), which at the moment are three already: the Turkish Unifol, a global player based in Istanbul and the only manufacturer of PVC stickers in Turkey; the French Tageos, world leader in the segment of so-called smart labels; and the Spanish Divipa (Distribuidora Vizcaina De Papeles), a company based in Derio, a few kilometers from Bilbao and specialized in premium labels and self-adhesive materials. In recent years, Fedrigoni had instead bought 70% of a newco which is a spin-off of the Tecnoform business dedicated to the development of innovative products for packaging, capable of replacing plastic with thermoformed cellulose; the security division (i.e. the business of security elements for banknotes and identity documents) of the UK-based Portals; the US company Acucote; the Italian Ritrama; the Mexican Industria Papera Venus (IP Venus) and the Italian Cordenons.
On the strength of this growth through acquisitions, Fedrigoni closed its 2021 Financial Statements with revenues up 21% to 1.6 billion euros compared to 1.32 billion in 2020, with revenues growing in both the special paper segments and FSA (Fedrigoni Self-Adhesive), and above all with an adjusted ebitda that jumped 29%, from 166.4 million to 214.8 million, but which pro-forma, considering the latest acquisitions, reaches 221 million. How much net financial debt at the end of 2021 was 577.7 million, down from 602.2 million in 2020, while the pro-forma net financial debt is 592.6 million (see here a previous article by BeBeez).
Debt also includes bonds. In fact, we recall that in 2018 a 455 million bond was issued maturing in 2024 with which Bain Capital had refinanced the acquisition loan for the purchase of Fedrigoni (see here a previous article by BeBeez). The issue was then reopened in July 2018 for 125 million to finance the purchase of Cordenons (see here a previous article by BeBeez) thus bringing the total issue to 580 millions. In July 2021, a first tranche of 60 millions was repaid (see here the press release), while last February the group then announced the repayment of a new tranche of the 2024 bond of 40 million euros of securities (see here the press release). The total outstanding of that bond has now therefore fallen to 480 million euros. We also recall that in 2020 the group then placed another bond, from 225 million euros, again with a six years maturity, to refinance the bridge loan to support the purchase of Ritrama (see here a previous article by BeBeez).