Giochi Preziosi, the well known Italian producer and distributor of toys, and Artsana, an Italian leading group in mums and babies products sector, are working at a project which will put all their retail chains under a same newco, Il Sole 24 Ore newspaper wrote yesterday.
More in detail, Giochi Preziosi will first finalze the acquisition of 20 Bimbo Store shops from Italian private equity operator Quadrivio sgr and the company founders and then it capitalize the newco bringing as capital the Bimbo Store shops together with its other shops Toys Center (130) and King Jouet (150 in France), while Artsana will do the same with its Prenatal shops (250, of which 80 are out of Italy).
Quadrivio sgr invested in Bimbo Store in 2011 acquiring a 51% stake in the capital of the retail chain focused on mums and babies products founded by Mirko Favari. The deal was then conducted on an enterprise value basis of 11 million euros after the company reached 30 million euros in revenues in 2010 with a 6% ebitda margin and a net financial debt close to zero. Last year Bimbo Store had 71 millions of revenues (from 53.3 millions in 2012) with an adjusted ebitda of 2.7 millions (from 0.5 millions) and a net financial debt of 1.4 millions (from 1.6 millions).
Coming back to the Giochi Preziosi-Artsana deal, the newco will be a 50-50 joint venture so Artsana will have to pay back to Giochi Preziosi about 70 million euros in cash. Artsana is controlled by the Catelli family (Enrico, Michele e Francesca) and led by ceo Claudio De Conto. Artsana owns brands such as Prenatal, Chicco, Lycia and Pic Indolor and has about 2 billion euros of consolidated revenues.
Cash received by Artsana will allow Giochi Preziosi to stabilize its financial situation as the group still has a too heavy debt with respect to its ebitda. The issue will actually be on the tabel in a meeting with creditor banks in the next few days (see a previous post by BeBeez).
Fiscal year 2013-2014 ended last 30 June saw consolidated revenues of 871 million euros in line with 2012-2013, an ebitda of 42,5 millions (a big jump from 3 millions the previous year) and a smaller net loss from the previous one of 182 millions. Consolidated debt lowered to 250 millions. But even company’s figures are improving banks are asking a recap in order to lower the debt. More over Italian private equity operator Clessidra sgr which has a significant stake in Giochi Preziosi’s capital is planning to exit its investment.
Infact Clessidra has been talking to a potential new investor for some months (see a previous post by BeBeez). Ocean Global, a large distribution company based in Shenzen and founded by Micheal Lee, is said to be the Chinese potential investor who made last September a 60 million euros offer for a 38% stake in the capital of Giochi Preziosi which is owned by Lauro Ventidue spa, the investment veichle in turn owned by funds of Clessidra sgr (57.6%), Hvb Capital Markets (24.2%) e Hamilton Lane fund (18.2%).
Mr. Lee’s proposal consisted in about 20 million euros to be paid for the 38% stake and in 40 millions to be given to the banks in order to reduce Giochi Preziosi’s debt (banks were exposed for 260 million euros at the end of June 2014), Debt had been restructured last year together with a 37.5 million euros capital increase by actual shareholders.
However thanks to the cash that Artsana is now to pay to Giochi Preziosi (net of what will be paid for the Bimbo Store shops) the company might be able to reduce itself its debt so Ocean Global’s offer might change in some way.
Agreements between shareholders and financing banks include a change of control clause that would be triggered if the 38pct stake is sold. This means that other financing investors (Intesa Sanpaolo with 14,25% and Idea Capital Funds sgr with 5%) might decide to sell. As far as chairman Enrico Preziosi (42,1%) is concerned, he would instead remain with a significant stake in the group and word is that he may increase its stake thanks to a financig from Mr. Lee.
