PAI buys Pasubio from CVC

Greg Gille
23 June 2021

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PAI Partners has agreed to acquire Pasubio, an Italian provider of premium leather for the automotive industry, from CVC Capital Partners.

The transaction, which is subject to customary closing conditions, is expected to close in October 2021. Financial details were not disclosed.

The deal values Pasubio at €600m, according to a source close to the situation. PAI is acquiring around 90% of Pasubio, which expects to record €70m in EBITDA this year, four sources familiar with the situation told Unquote sister publication Mergermarket. Pasubio CEO Luca Pretto will keep a minority interest and reinvest in the business, the sources added.

PAI will be investing from PAI Europe VII, which closed on €5bn in 2018. The vehicle targets deals with EVs of between €300m and €1.5bn, making equity investments of €150-400m.

CVC bought Pasubio in 2017. It was invested through CVC Capital Partners VI, which closed on €10.5bn in 2013.

PAI said in a statement that it would support Pasubio's management team in its future growth plans, which include further consolidating the fragmented global automotive leather market and diversifying the company's offering into other premium automotive interior materials.

Previous Mergermarket reports cited sources saying that once the new investor is on board, Pasubio will look to pursue strategic acquisitions in key markets such as the US and Asia. The company's management has already drafted an initial list of potential targets, specifically looking at manufacturers of premium organic leather, the reports added.

Mergermarket reported in May that the company was drawing strong interest ahead of first-round bids in the JP Morgan-run auction. Beyond PAI, other large financial sponsors invited to bid included BC Partners, Carlyle, Cinven, NB Renaissance Partners, PAI Partners and ICG, the report noted.

Previous funding
CVC acquired a controlling stake in Pasubio's holding company, Mario Pretto Finanziaria, via its €10.5bn CVC Capital Partners Fund VI in 2017. The founding Pretto family retained a minority stake and continued to lead the business alongside the management team.

The deal was reported to value the business at around €285m based on expected sales of €335m turnover and a €35m EBITDA in 2017. In 2016, the business generated €30m in EBITDA from a turnover of €292m.

Unicredit and BNP Paribas provided a senior credit facility of €140m and a rolling credit facility to support the acquisition.

Following the deal, the company aimed to boost its expansion through bolt-on acquisitions, some of which are reportedly at an advanced stage of negotiation.

Company
Headquartered in Vicenza, Pasubio is a leather manufacturer specialising in high-quality leather products for car interiors, serving the premium and luxury automotive segments. Pasubio employs approximately 1,000 people and operates six facilities, where it performs tanning, post-tanning and cutting activities. The company has plants in Europe and North America, as well as a dedicated R&D centre in Italy. Key clients include Porsche, BMW, Bentley, JLR, VW, Rolls Royce, Lamborghini and Maserati.

People
PAI Partners – Simone Cavalieri (partner and head of Italy).
CVC Capital Partners – Giorgio De Palma (partner).
Pasubio – Luca Pretto (CEO).

Advisers
Equity – Deutsche Bank (M&A); LABS Corporate Finance (M&A); Latham & Watkins (legal); Kirkland & Ellis (legal); Roland Berger (commercial due diligence); PwC (financial due diligence); Efeso Consulting (operational due diligence); Ramboll (ESG due diligence); Russo De Rosa Associati (tax).
Vendor – JP Morgan (M&A); Shearman & Sterling (legal); Kearney (commercial due diligence); EY (financial due diligence); ERM (environmental due diligence); Facchini Rossi Michelutti (tax).