De Cecco attracts interest from ProA Capital, denies talks

Micaela Osella
22 July 2021

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De Cecco, a family-owned Italian pasta maker, has attracted unsolicited interest from Spanish investor ProA Capital, according to two sources familiar with the situation.

The parties have engaged in exploratory talks, with the private equity firm keen on acquiring a minority interest in the family business, the sources said, adding that the outcome of negotiations is difficult to predict.

A spokesperson for De Cecco denied that talks are ongoing with private equity firms. He added that the company receives approaches from external investors regularly, but said that the owning family is committed to the full independence of the business. ProA Capital did not return requests for comment.

If it were to materialise, a deal could create tangible synergies, one of the sources said. ProA owns Spain-based Pastas Gallo and could also use its experience to accelerate De Cecco's expansion in southern Europe, the same source said.

De Cecco has EBITDA in the region of EUR 55m, the sources said, noting that Covid-19 has had a positive impact for the Italian food industry by driving up the demand for products such as pasta.

The Fara San Martino-based company is well known as a likely PE target having rebuffed an unsolicited offer prior to the Covid-19 crisis that valued the business at 15x EBITDA, the second source said. It also considered a listing on the Milan stock exchange, as reported by Mergermarket in 2018.

The pandemic has created a new reality in which several Italian family-owned businesses become more receptive to strategic options, the sources added, citing as recent examples the sale of a 60% stake in fashion house Etro to PE firm L Catterton – a deal first disclosed by Mergermarket – and the imminent sale of Bios Line, an Italian producer of natural cosmetics and food supplements, to Palladio, as reported.

De Cecco could be added to this list shortly as now it has the chance to reach a higher valuation thanks to the abundant liquidity in the market, the second source said.

However, the company has previously encountered difficulties to execute this type of project because of clashes over governance and strategy between members of its board, according to reports in the Italian press.

A minority stake sale to a financial investor with expertise in the space such as ProA could be seen differently and solve those conflicts, the first source said.