Consumer Market Italy M&A Trends | 2018 · Consumer & Market Deals Leader 0 10 20 30 40 50 60 70...

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Consumer MarketItaly | M&A Trends | 2018

Methodology & Glossary

Executive Summary

At a glance

Overview on Consumer multiples

Food

Beverages

Personal Care & Cosmetics

Fashion & Luxury

Furniture & Design

Specialty Retail

Leisure

Deals by geography

Value Creation in Deals

Data Analytics in Deals

Our 2018 Consumer credentials

Italian Consumer Deals Team

Contacts

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Index

4 Retail and Consumer M&A Trends | 2018

Methodology

Reported deals have been sourced from .

Deals have been selected based on the date of announcement. Revenues and EBITDA have been sourced from the latest financial statements available on public databases (AIDA, Orbis, Cerved) and refer to the individual accounts (unconsolidated) of the target entity, except where otherwise stated. Revenues and EBITDA are available for 83% and 77% of the reported deals respectively. Deal value is not indicated since in most cases the data are not publicly available.

Glossary

Domestic deals are those with both Italian acquirer and target. Inbound deals involve a foreign acquirer and an Italian target.Outbound deals involve an Italian acquirer and a foreign target.

Financial investors include Private Equity, SPAC (listed Special Purpose Acquisition Company), family offices, financial holdings and acquisitions made by Private Equity portfolio companies. Strategic investors include corporates, private investors and buy-backs.

North-West includes Valle d’Aosta, Liguria, Lombardy, Piedmont. North-East includes Friuli-Venezia-Giulia, Trentino-Alto Adige, Veneto. Centre includes Emilia-Romagna, Lazio, Marche, Tuscany, Umbria. South & Islands include Abruzzo, Molise, Basilicata, Calabria, Campania, Apulia, Sardinia, Sicily.

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The Italian M&A Consumer arena hosted 202 transactions in 2018 (+13% vs. last year), with Food largely dominating in terms of number of deals (60 - almost stable vs. 2017). Financial investors were particularly active with 91 deals announced in 2018 (vs. 54 in 2017), but with a lower average size compared to 2017 (average Target revenues of €79m in 2018 vs. €115m in 2017). Corporate buyers were more focused on the domestic market, leading to a decrease in the number of Outbound transactions (20 in 2018 vs. 27 in 2017). 5 large cross border corporate deals have been announced in 2018 including:

• the acquisition of Nestle’s US confectionery business by Ferrero for a deal value of €2.3bn;

• the public tender offer made Richemont to buy a 75% share in Yoox Net-a-Porter Group delisting

the company (€2.7bn investment and €3.4bn EV); • the acquisition of Gianni Versace by Capri Holdings

(Micheal Kors) for €1.8bn;• the 70% investment by Snaitech in Playtech at an EV of €0.8bn (for 100%); • and the acquisition of the US Mars Drinks by Lavazza.

The main deals announced by Private Equity houses included:

• the acquisition of Forno d’Asolo (frozen food) by BC Partners;• the 41% investment by FSI in the fashion brand Missoni;• the creation of the newco Design Holding where

Investindustrial and Carlyle contributed their furniture and design portfolio companies Flos, B&B Italia and Louis Poulsen (acquired in July 2018);

• the investments of OpCapita in the pizzeria chain RossoPomodoro and of Alpha in Calligaris (producer of high-end furniture).

Despite clouds of recession, significant volumes of activity are expected also in 2019, at least in the first semester, with a few macro-trends driving market growth across all segments:

• Sustainability is by far the most relevant and pervasive trend impacting the overall industry from Food, Beverages and Cosmetics (fresh, organic/bio, cruelty free) to Fashion (declining use of furs, inclusivity, “made in”), Furniture & Design (waste recycle) and also adjacent segments like Packaging;

• Innovation will be the key to attracting new customers, particularly Millennials and Gen Z.

Brands have realised that, to extend their product portfolio, investments in niche innovative companies are an easier alternative to internal development.

This trend is currently driving large corporates’ investment in both emerging Fashion brands

and niche, highly innovative Cosmetics companies; • Value for money continues to be a mantra not

only for final customers but also for B2B producers working with fashion and luxury brands;

• Lifestyle changes such as the increasing number of singles and working women is leading to a revolution in the most traditional segment of this industry (Food), with expectation of higher

consumption of ready meals, frozen food and a boost in food delivery. On the other side, ageing

and growing attention to health and personal care will polarise personal purchases vs. premium products;

• Immediacy – E-commerce will be the sale channel with the highest growth potential across all segments. After Fashion and Food Delivery, Food, Cosmetics and Design have an almost untapped potential

to discover. With this report we aim to provide an outlook on the deals dynamics in the Consumer space.

We sincerely hope this can be a valuable read and lookforward to 2019.

Emanuela PettenòPwC Deals – Transaction Services Partner Italy Consumer & Market Deals Leader

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Food

Num

ber

of d

eals

Fashion & Luxury

Specialty retail

& leisure

Furniture & design

Beverages Personal care

& cosmetics

5760

34

43

35

48

18

2923

1511

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Executive Summary

Despite the fear of a slowdown in M&A activity, more than 200 deals (including 5 IPOs) have been announced in the Consumer segment in 2018 (vs. 178 in 2017)

FY 17 FY 18

by Emanuela Pettenò


At a glance 2018 vs. 2017 – Number of deals

Compared to 2017

International features

Number of deals where target revenues are…

Of which advised by PwC

<€10m

€10-100m

>€100m

>€500m

not public

Number of deals by segment

38

10

24

96

34

6

6

14

3

Food

60 vs. 57

Fashion & Luxury

43 vs. 34

Furniture & Design

29 vs. 18

Beverages

15 vs. 23

Personal care & Cosmetics

7 vs. 11

Specialty retail and Leisure

48 vs. 35

Domestic deals

118vs. 91

Inbound deals

64 vs. 58

Outbound deals

20 vs. 29

n.a.

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Deals by segment for strategic investors

Deals by segment for financial investors

Number of deals by investor type Deals by target revenues and investor type

At a glance 2018 vs. 2017 – Target and Bidder

Food 41 vs. 42 19 vs. 15

Beverages 9 vs. 20 6 vs. 3

Personal care & Cosmetics 5 vs. 5 2 vs. 6

Fashion & Luxury 20 vs. 22 23 vs. 12

Furniture & Design 7 vs. 14 22 vs. 4

Specialty retailand Leisure 29 vs. 21 19 vs. 14

vs. 124

Most relevant segments

Strategic investors

Financial investors Financial investors

Strategic investors

111

91

55%

45% 37%

63%

vs. 54 vs. 47%

vs. 53%

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Overview on Consumer multiples

by Alessandro Vitali

Transaction multiples on Consumer deals were still high in 2018

Transactions occurring in 2018 confirmed the rising trend in multiples, with a smoothed average EV/EBITDA ratio in the range of 9x-16x, however with a high variance across sub-sectors and categories. The highest multiples were paid in the Cosmetics and Fashion segments (smoothed average of c.16x and 13x, respectively). On the other hand, lower multiples were recorded in Beverages and Leisure deals (c.9x).

Strategic vs financial buyers

Strategic buyers are prepared to pay higher multiples compared to financial investors (average of c.17x vs. 12x), leveraging on the long term view of the investment and on the value attributable to operational and strategic synergies. In this context, it is worth mentioning the multiple paid by Michael Kors for the Versace deal which has been by far the highest in the sector, at c.41x and has been excluded from the calculation of the average.

Italian companies maintain their strong appeal to international investors

Inbound transactions recorded higher multiples compared to outbound and domestic deals with average EV/EBITDA multiples in the region of 18x, compared to 15x and 11x respectively.

This reflects the strong appeal of Italian companies and brands for international investors, based on the quality of products, positive financial performances and the creativity and innovation of entrepreneurs.

Our expected trends for 2019 are an increase in the number of transactions in the Food and Fashion segments, including adjacent segments working on a B2B basis, such as ingredients, fabrics, accessories, and turnaround situations, particularly in the fashion space, and a slight decline in multiples.Multiples are still discounted compared to the rest of Europe and this is another good reason encouraging foreign investment.

Methodological note

Presented transaction multiples have been calculated by PwC as the ratio between Enterprise Value (EV) and 2017 EBITDA, based on the latest available public information. Both EV and EBITDA are sourced from publicly available information. Please note that due to the lack of information on the EV for certain deals, the presented analysis covers a sample of 34 transactions announced in 2018 (17% in terms of number of deals, and 54% based on Target revenues) and should be considered as illustrative only. Smoothed average has been calculated as the average for each sub-sector excluding the highest and lowest transaction multiple.

Food

10x 20x 30x 40x 50x

Beverages

Fashion & Luxury

Furniture & Design

Spelcialty Retail & Leisure

Personal care & Cosmetics

13.1x 9 deals

2 deals

2 deals

10 deals

4 deals

7 deals

8.6x

16.1x

13.3x

12.3x

9.0x

2018 Transaction Multiples

Smoothed Average

(*) Calculated as the ratio between Enterprise Value (where disclosed) and 2017 EBITDA

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Food

by Elena Borghi and Alberto Zanatta

Also for 2018, Food confirmed its attractiveness for M&A, with 60 deals announced in 2018 (vs. 57 in 2017). This year was marked by 38 domestic deals, 16 inbound deals, involving international Private Equity firms and Corporates, and 6 outbound deals, with domestic Corporates significantly strengthening their presence in the North American market.

“Made in Italy” is still very attractive for foreign investors

The significant number of inbound transactions (16) confirmed also for this year the interest in the quality of ‘Made in Italy’ products.In this respect, this segment has seen the acquisition of Forno d’Asolo, producer and distributor of frozen bakery products, from the Private Equity Fund BC Partners and the investment of Kharis Capital Advisory, a Switzerland-based PE, in a minority stake of Rigoni di Asiago, Italian producer and distributor of creams and marmelades, with the Rigoni family still keeping the control of the company. These funds are expected to support the target companies to expand their product offering as well as to consolidate the market shares and expand internationally (organically and through add-ons).

Large players focus on their global presence

Italian large players significantly marked the 2018 M&A by strengthening their positions in the North American and European markets. In particular, Ferrero announced the acquisition of Nestle’s US confectionery business for a deal value of €2.3bn. This, together with last year acquisitions of Fannie May Confections Brands and Ferrara Candy Company, will allow Ferrero to become the third-largest confectionary company in the U.S. market. Also Parmalat (Lactalis Group) continued its international expansion announcing the acquisition (through its subsidiary Parmalat Canada Ltd.) of the Natural Cheese Business of Kraft Heinz Canada, the Canadian subsidiary of The Kraft Heinz Group, for a consideration of €1.1bn. Irca, an Italy-based producer of chocolate and artisanal products (portfolio company of The Carlyle Group), has announced the acquisition of Dobla, a Netherlands-based chocolate decoration producer.

Baked goods segment recorded the highest number of deals announced

This year was characterised by 9 deals announced in the baked goods sub-segment, mainly completed by corporates and as add-ons of Private Equity portfolio investments to expand the product range, like the acquisition of Grissinificio Europa from Monviso, after its sale from PM Partners to Cerea Partenaire and Capzanine, France-based private equity firms.

Healthy food and dietary segment is alsoin constant expansion following customer demands, with the acquisition of Alpipan, an Italy-based company engaged in production of gluten-free and dietetic baked food by Bauli, leader of the bakery segment in Italy.Melegatti, historical brand active in the business of Christmas cakes, was recovered from bankruptcy by private investors.

“The market is still hungry”: our expected trends • Foodtech has created a real disruption in the delivery business, creating popular market

places and websites dedicated to food delivery. This progressive trend will increase going forward generating demand of financing and acquisitions

of start ups from retail chains and venture capitalists;• Hyperlocal food is growing in popularity reducing

the environmental impact with expected support to local businesses;• Increasing demand for ‘cruelty free’ and ‘free from’

labels in food is becoming more and more popular, boosted by the growing attention for environment, healthy food and personal care;

• Consumers’ demand of fresh, organic and “better-for-you” products, able to combine a pleasant taste with a healthy nutritional profile is peaking up;• The demand of novel food, i.e. food originated

from plants, animals and microorganisms included in insects, vitamins, minerals, food supplements, already popular in Far East, is expanding also

in Europe and North America. This segment has been recently regulated by EU (Jan18), leading to a potential expected rapid growth in demand.


Period Target Country Activity Acquirer Country Type Target

Revenues FY17 (€m)

Target EBITDA

FY17 (€m)

Food processing

Jan-18 Bertagni 1882 SpA Italy Filled pasta producer Ebro Foods SA Spain Corporate (70%)

66.3 11.3

Jan-18 Monviso SpA Italy Baked goods Capzanine, Cerea Capital France Private Equity 35.5 7.7

Jan-18 S.D.M. Srl Italy Diet food PronoKal Group Spain PE add-on 8.0 0.3

Jan-18 Aromata Group Srl Italy Natural ingredients Ambienta Sgr SpA Italy Private Equity 16.6 2.1

Jan-18 Nestle S.A. (US confectionery business) **

US Confectionery manufacturer

Ferrero SpA Italy Corporate 707.1 106.1

Jan-18 Labomar s.r.l. Italy Producer of dietary supplements

Walter Bertin Italy Private Investor

41.9 7.0

Jan-18 Grandi Salumifici Italiani SpA

Italy Ham producer Unibon SpA Italy Corporate (50%)

650.1 22.5

Jan-18 Kraft Heinz Canada (Canadian natural cheese business)

Canada Dairy products Parmalat SpA Italy Corporate 374.8 n.a.

Feb-18 Midland Food Group Ltd.

United Kingdom

Baked goods and meat

Granarolo SpA Italy Corporate 70.0 n.a.

Feb-18 Michelis Egidio Italy Baked goods Romana Food Brands Corp

Canada Corporate n.a. n.a.

Feb-18 Holding Dolciaria Italiana SpA

Italy Chocolate products manufacturer

Avenue Capital Group US Financial Investor

26.3 2.8

Feb-18 Trentinalatte SpA Italy Dairy products 3A Latte Arborea Italy Corporate n.a. n.a.

Mar-18 Parmacotto SpA Italy Ham producer Giovanni Zaccanti Italy Private Investor

58.0 5.8

Mar-18 Antico Forno Della Romagna Srl - Fratelli Bassini brand

Italy Frozen bakery producer

Capzanine Italy Financial Investor

11.0 2.0

Mar-18 CRM Srl Italy Baked goods Equita Sim SpA, Aksia Group SGR SpA

Italy Private Equity 17.1 2.3

Apr-18 Janousek SpA Italy Natural flavouring Synergy Flavours Ltd. Ireland (Republic)

Corporate 6.0 0.6

Apr-18 Stelliferi & Itavex S.P.A. Italy Hezelnut producer Ferrero SpA Italy Corporate (51.1%)

195.2 12.6

Apr-18 Artigianpiada Srl Italy Baked goods Morato Pane SpA Italy Corporate (90%)

6.0 0.6

Apr-18 Caseificio Val d'Aveto Srl

Italy Dairy products Sabelli SpA Italy Corporate 3.6 0.5

May-18 Pharcoterm Srl Italy Food supplements producer

Nutrilinea Srl Italy Corporate 12.6 1.7

May-18 Costa D'Oro SpA Italy Olive oil producer Groupe Castel, Groupe Avril SCA

France Corporate 143.4 3.1

May-18 Migliora Srl Italy Powdered milk producer

Podini Holding S.p.A. Italy Financial Investor

21.0 (0.3)

May-18 Surgital SpA Italy Frozen food producer

Bacchini family Italy Buyback (16%)

73.6 13.7

Main deals in Food – 2018

13

May-18 Giuso Guido SpA Italy Ice-cream ingredients producer

Optima SpA Italy Corporate 18.9 1.2

May-18 Grissinificio Europa Srl Italy Baked goods Monviso SpA Italy PE add-on 6.5 1.1

Jun-18 Supermercato24 Srl Italy Grocery delivery

360 Capital Management S.A., Innogest SGR SpA, Fondo Italiano d'Investimento SGR SpA, Endeavor Global, Inc.

Italy Financial Investor

5.4 (1.5)

Jun-18

Centrale del Latte d'Italia S.p.A (salads and fruits business unit)

Italy Fresh ready meals Zerbinati Srl Italy Corporate n.a. n.a.

Jun-18 Nutkao Srl Italy Semi-finished food producer for the sweets industry

White Bridge Investments SpA

Italy Private Equity (80%)

123.1 14.9

Jun-18 Geloso Italy Natural ice-cream producer

Francesco Trapani Italy Private Investor (51%)

n.a. n.a.

Jun-18 Rigoni di Asiago Srl Italy Food products from organic farming

Kharis Capital Advisory AG

Switzerland Private Equity (42.7%)

122.2 16.9

Jun-18 Forno d'Asolo SpA Italy Frozen bakery products

BC Partners Limited United Kingdom Private Equity 121.2 14.7

Jun-18 Atici Italy Oil rafination Intercontinental Specialty Fats Sdn. Bhd.

Malaysia Corporate (70%)

12.9 3.6

Jul-18 Evergreen Life Products Srl

Italy Manufacturer and distributor of natural food supplements

Palladio Finanziaria SpA Italy Private Equity 14.7 1.3

Jul-18 Apicoltura Piana SpA Italy Honey producer Naturalia Ingredients Srl Italy Corporate 20.4 2.3

Jul-18 Alibert 1967 Srl Italy Pasta producer Fulvio Conti Italy Private Investor (15%)

7.3 0.4

Jul-18 HDS SpA Italy Fresh food producer D&D Italia SpA Italy Corporate 30.5 (3.7)

Jul-18 Alpipan Srl Italy Baked goods Bauli SpA Italy Corporate (80%)

8.4 1.8

Jul-18 Pastificio Felicetti Srl Italy Pasta producer Istituto Atesino di Sviluppo

Italy Financial Investor (22%)

35.3 3.0

Jul-18 Pastiglie Leone Srl Italy Confectionery manufacturer

Undisclosed bidder Italy n.a. 9.5 0.9

Jul-18 Migali Srl Italy Dairy products Cooperlat Soc. Coop. Agricola

Italy Corporate 11.9 0.2

Aug-18 Campus Srl Italy Ingredients for meet processing

Firmenich SA Switzerland Corporate 50.3 8.7

Aug-18 Giopescal Srl Italy Fishmonger chain Antonio Verrini & Figli SpA Italy Corporate 4.2 (0.2)

Sep-18 Melegatti SpA* Italy Baked goods Spezzapria family Italy Private Investor

45.0 (2.0)

Sep-18 Piovesana Biscotti SpA Italy Baked goods Nuova Industria Biscotti Crich SpA

Italy Corporate 6.4 (0.2)

* Consolidated financial report** Source Merger Market



Target EBITDA

FY17 (€m)




Sep-18 Prosciuttificio S.Giacomo Srl

Italy Ham producer Raspini SpA Italy Corporate n.a. n.a.

Sep-18 Stella 81 SpA Italy Fresh meat producer Salumificio Bombieri SpA Italy Corporate n.a. n.a.

Sep-18 SAC SpA Italy Canned food processing and marketing

Consorzio Casalasco Del Pomodoro Soc. Agr. Coop.

Italy Corporate (65%)

36.7 2.1

Sep-18 Agrimola SpA Italy Frozen fruit producer Unigrains SA France Private Equity 33.4 2.2

Oct-18 The Bean Alliance

Australia Coffee machines and related products

Massimo Zanetti Beverage Group SpA


Oct-18 Dobla B.V. Netherlands Chocolate decoration producer

Irca SpA Italy PE add-on 51.0 n.a.

Oct-18 Rispo Frozen Food Srl

Italy Frozen food producer

Europe Capital Partners VI

Luxembourg Financial Investor (60%)

n.a. n.a.

Oct-18 Nutrafood Srl Italy Health supplement Doehler Group SE Germany Corporate (70%)

n.a. n.a.

Nov-18 Pasta Zara SpA* (Muggia plant)

Italy Pasta producer Barilla G. e R. Fratelli SpA Italy Corporate 221.2 (21.5)

Nov-18 Ferrara Food Italy Agro-industrial products

Italtom Srl Italy Corporate n.a. n.a.

Dec-18 Dolci Preziosi Italy Confectionery manufacturer

Cerealitalia SpA Italy Corporate n.a. n.a.

Dec-18 Panapesca Italy Processing andsales of frozen fish products

Xenon Private Equity S.a.r.l.


Food retail

Feb-18 Selecta SpA Italy Quality food distributor

Savencia Fromage & Dairy

France Corporate 63.6 5.8

Jul-18 Mille Sapori Plus sp. z o.o.

Poland Italian food distributor

Inalca SpA Italy Corporate (60%)

16.9 n.a.

Jul-18 Longino&Cardenal* Italy Quality catering Listing on AIM IPO 28.5 1.5

Nov-18 Agrifood Abruzzo Srl Italy Distribution of quick-forzen foods

NV d'Arta Belgium Corporate 33.3 2.7

* Consolidated financial report** Source Merger Market



Target EBITDA

FY17 (€m)


The Beverages segment saw 15 deals in 2018 (vs. 23 in 2017). Most sizeable transactions were in the Wine & Spirits and in the Coffee segments (4 and 2 deals for targets with >€50m revenues).

Deals in the Beverage segment announced in 2018 included 6 transactions led by financial investors and 9 by corporates.

The most relevant Private Equity transactions were (i) the minority investment by IdeA Taste of Italy (22.5%) in Casa Vinicola Botter, (ii) the minority investment of 21 Investmenti (36% in joint venture with Aberdeen Standard Investments) in Casa Vinicola Zonin (iii) the acquisition of AEB SpA by Apax France and (iv) the 60% acquisition of L’Aromatika (brand Caffè Borbone) by Italmobiliare.The most relevant corporate transaction was theacquisition of US Mars Drinks by Lavazza.

Our expected trends

• International expansion will continue to drive Italian corporates’ acquisitions in terms of: (i) premium products and (ii) penetration in new markets,

to reinforce their positioning among the global sector leaders. The E-commerce channel is identified

as an opportunity to: (i) increase revenues and (ii) reach new countries/markets;• (Ultra)premium Wine and Sparkling Wine brands

will garner interest from both Private Equity funds and Financial investors due to the attractive margins;

• Coffee sector will undergo a consolidation across Italy and Europe, with the purpose to create profitable players with bigger scale;

• Soft drinks M&A activity will be driven by the pursuit of targets offering excellence in terms of product quality;• Consumption of beer appears to be declining,

except for the premium/craft segment, that will continue to attract the interest of large players.

Beverages

by Domenico Creanza

17



EBITDA FY17 (€m)

Wine & Spirits

Jan-18 Casa Vinicola Botter Carlo & C. S.p.A

Italy Wine producer DeA Capital Alternative Funds SGR

Italy Private Equity (22.5%)

180.4 26.2

Mar-18 Svinando Wine Club Italy Wine e-tailing Giordano Vini SpA Italy Corporate 1.0 0.1

Apr-18 Tenuta Montereale Srl Italy Wine producer Mionetto SpA Italy Corporate n.a. n.a.

Apr-18 Tannico SpA Italy Wine e-tailing N.U.O. Capital Italy Private Equity 10.5 (1.8)

Sep-18 Terre Cortesi Moncaro Soc. Coop. Agr.

Italy Wine producer Winemarket Nordic AB Sweden Corporate (18%)

21.1 3.6

Sep-18 AEB SpA Italy Biotechnology solutions for winemaking

Apax Partners SAS France Private Equity 88.8 16.6

Oct-18 Santero fratelli & C I.v.a.s.s. SpA

Italy Wine producer Santero Family Italy Corporate 54.0 12.1

Oct-18 Divici Società Agricola Srl Italy Prosecco producer Ruffino Srl Italy Corporate 3.0 1.2

Dec-18 Casa Vinicola Zonin SpA Italy Wine producer 21 Investmenti Italy Private Equity (36%)

196.3 12.7

Coffee

Mar-18 L' Aromatika (brand Caffè Borbone)

Italy Coffee roasting and products

Italmobiliare SpA Italy Financial Investor (60%)

94.0 n.a.

May-18 Quality Espresso S.A. Spain Coffee vending machines EVOCA SpA Italy Corporate 27.2 n.a.

Oct-18 NeroNobile Srl Italy Manufacturers of coffee capsules

EOS Investment Management Limited

United Kingdom

Private Equity (67%)

20.0 3.2

Oct-18 Mars Drinks US

Manufacturing and distribution of coffee vending machines and other beverages

Luigi Lavazza SpA Italy Corporate 291.7 n.a.

Soft drinks & other

Aug-18 Sorgenti Italiane Srl Italy Minarel water

Alberto Bombassei, Vitaliano Borromeo, Germano Panelli, Friulian Nicola Cresciuttti, Centurion Global Fund SICAV Plc

Italy Private Investor (33%)

n.a. n.a.

Oct-18 Polo Nord Ice Cubes Srl Italy Ice cubes Procubitos S.L. Spain Corporate (60%)

1.4 0.3

Main deals in Beverages – 2018


Our expected trends

Interest for M&A is set to continue thriving in 2019, with major corporates evaluating acquisitions of niche and innovative brands (as an alternative to internal development) as a strategy to grow and meetMillennials and Generation Z’s changing desires.

In addition, there is an increasing community of Private Equity houses who had success in growing a number of beauty brands (e.g. Intercos, Gotha Cosmetics, Ancorotti, Tricobiotos, etc.) and can offer a set of experiences, relationships and contacts.The resilience of the industry during times of economicdownturn is one of the other key attractive factors.

Green and Bio/Organic (in both products and packaging) remain one of the major business trends for branded products, combined with lower interest for lines sponsored by celebs in favor of niche/innovative products with cosmeceutical content.

Cannabis based cosmetics and therapies (without THC) will lead the way for the development of anti-age and hydrating cosmetics and as a remedy for certain dermatological diseases (psoriasis, acne).

E-commerce of Personal Care & Cosmetics products passed from €40m in 2014 to €435m in 2018 (School of Management del Politecnico di Milano and Netcomm), or from 0.4% to 4.2% of total retail sales.Traditional brick & mortar retailers suffered more from the competition of pure online players in the fragrance market than the aggression from Amazon. The main fashion e-tailers have opened a section for cosmetics in their website, to exploit cross-selling opportunities between fashion and personal care products. Mass market fashion brands have launched their low-cost branded cosmetic products sold in both physical and e-stores. Traditional retailers responded with private labelled products (carrying the name of their store/chain), giving the retailer a better profitability compared to brands.

7 deals were recorded in Personal care & Cosmetics segment in 2018 (vs. 11 in 2017), which were largely international (only 2 domestic).

The most important corporate acquisitions were driven by the desire to extend corporates’ product portfolios in uncovered market segments: • Equilibra (health supplements, natural skincare and cosmetics products) was acquired by Unilever,

with the aim of growing its presence in the ‘natural’ skin and hair care segments and strengthening its presence in Italy; • the 100% acquisition of Deborah Group by Sodalis,

will allow the latter to consolidate its presence in make up, where Deborah has a leading position;• Blackstone-backed SH Kelkar (based in India)

acquired a 51% stake in the Italian fragrance firm Creative Flavours and Fragrances (with the remainder to be acquired within 3 years); the deal will help SH Kelkar increase its presence in the flavour and fragrance sector, aiming to fulfil its potential to emerge as one of the top players.

The only Private Equity led transaction was the 33% investment by Peninsula Capital Partners in Kiko (€80m deal value), mono-brand retail chain with more than €600m sales, a strong international presence (approx. 65% of sales are foreign sales) and own e-commerce (3.5% of sales). The support from the Private Equity fund is expected to enable the Group to pursue an investment plan focused on technological innovation (supply chain, IT and e-commerce).

Personal Care & Cosmetics

by Elena Borghi

19



EBITDA FY17 (€m)

Own brand manufacturer

Jun-18 The Organic Pharmacy Limited

United Kingdom

Skincare Istituto Ganassini di Ricerche Biochimiche SpA

Italy Corporate n.a. n.a.

Jun-18 Equilibra Srl Italy Personal care Unilever Plc United Kingdom

Corporate (75%)

52.9 5.1

Oct-18 Meglio Italy Hygiene and personal care products

Bolton Group International Srl

Italy Corporate n.a. n.a.

Dec-18 Deborah Group Srl* Italy Cosmetics Gruppo Sodalis Srl Italy Corporate 72.1 5.0

Dec-18 Laboratoire Nuxe Italia Srl

Italy Cosmetics Laboratoire Nuxe France Corporate (49%)

16.0 2.0

Contract manufacturer

Jan-18 Creative Flavors & Fragrances

Italy Flavouring SH Kelkar and Company Limited

India PE add-on (51%)

27.8 1.4

Retailer

Jul-18 Kiko Cosmetics* Italy Cosmetics Peninsula Capital Partners LLC

US Private Equity (33%)

611.1 25.2

* Consolidated financial report

Main deals in Personal Care & Cosmetics – 2018


Fashion & Luxury

by Aida Di Spiezio Sardo and Alessandro Vitali

Italian Fashion & Luxury segment continued to show its allure in the M&A market with 43 deals recorded in 2018 (vs. 34 in 2017), with a nearly equal balance between domestic and international deals.

Fashion has helped to boost the value of M&As in Italy driven by large corporates focused at expanding their presence in new market segments (Micheal Kors/Gianni Versace, Richemont/YNAP) and Private Equity interested in fashion brands with succession issues (41% investment of FSI in Missoni and a majority investment of L-Gam in Woolrich). In 2018, 43 deals have been announced, of which 22 domestic, 14 inbound and 7 outbound. The transactions involved a wide range of subsectors, including apparel, sportswear, shoes, accessories, textile and leather manufacturers. Financial investors continued to play a significant role in the market, being involved as buyers in approximately 53% of total transactions. This highlights the solid financial performance of this segment along with today’s quite positive forecasts.

The return of mega deals

2018 will be remembered for a few mega deals which involved an iconic Italian fashion brand and one of the most important global players in the e-commerce sector:

• Gianni Versace was acquired in September 2018 by Capri Holdings for €1.8bn (implicit multiple of 41x on 2017 accounts). Capri Holdings (which includes the brands Michael Kors and Jimmy Choo) is a luxury group listed on the New York Stock Exchange with a market cap of more than $6bn. This acquisition contributes to create one of the leading global luxury fashion groups in the world and Versace will have the chance to accelerate its global retail footprint. Donatella confirmed to remain head of style;

• In March 2018, Richemont, the Yoox Net-a-Porter Group’s largest shareholder, made a public tender offer to buy a 75% in YNAP. The total scale

of the investment for Richemont was about €2.7bn, valuing the overall YNAP business at about €5bn (implicit multiple of 21x on 2017 accounts).

The rationale for the investment was to provide the YNAP group with additional resources to further strengthen and accelerate the long-term leadership in online luxury;

• In March 2018 Gruppo Coin SpA (one of the largest Italian chain of department store), was sold by BC Partners to a group of managers and investors.

21

Fashion & Luxury

by Aida Di Spiezio Sardo and Alessandro Vitali

Our expected trends

The slowdown of Chinese economy, which recorded in 2018 the lowest growth rate since 1990 (+6.6%), and the difficult relationships between China and US are negatively affecting listed brands. Luxury brands proved to be more resilient in Europe, while in US sportswear brands realized the best performances. Fast fashion brands no longer appear to be appealing in any markets. Italian fashion and luxury brands will likely remain under the spotlight also for 2019.

• The diversification process of some big industrial players with acquisitions of brands active in new segments, or with a different positioning and niche/innovative brands will be an important M&A driver

for fashion brands; this is also connected with the fact that luxury brands are progressively

abandoning furs in favour of other materials;• Athleisure and sportswear brands are expected to continue to arouse the interest and will focus

more on technical rather than fashion apparel;• Vertical integration and related cost efficiencies will be a driver for acquisitions of manufacturers of shoes and high quality components. This segment is also interesting for financial

investors, as highly profitable and not exposed to single brands;• Private Equity houses will also consider turnaround situations with a potential of re-launch in the medium term.



Target EBITDA

FY17 (€m)

Apparel

Jan-18 Borg SpA - Anna Rita N brand

Italy Clothing Navy Group SpA Italy Corporate (45%)

10.6 0.8

Feb-18 MSGM Srl Italy Apparel Style Capital SGR SpA Italy Private Equity (32%)

6.2 (0.1)

Feb-18 La Perla Global Management Italia Srl Ltd.

Italy Lingerie producer and retailer

Sapinda Holding B.V. Netherlands Financial Investor

64.3 2.5

Mar-18 Forest Srl - Save the Duck and Ganesh brand

Italy Casualwear Progressio SGR SpA Italy Private Equity (65%)

32.2 7.6

Apr-18 Duvetica Industrie SpA Italy Down jackets F&F Co. Ltd. South Korea Corporate n.a. n.a.

Jun-18 Missoni SpA Italy Clothing FSI SGR SpA Italy Financial Investor (41.2%)

59.5 8.6

Jul-18 Nicole Fashion Group SpA Italy Bridal wear Pronovias S.A. Spain PE add-on 24.6 2.7

Jul-18 Re/ Done US Denim Style Capital SGR SpA Italy Private Equity (30%)

20.0 n.a.

Jul-18 Monnalisa* Italy Childwear Listing on AIM IPO 47.0 6.9

Aug-18 Thom Browne US Manswear Ermenegildo Zegna Holditalia SpA

Italy Corporate (85%)

n.a. n.a.

Sep-18 Spyke Italy Technical apparel Liberty Motors S.A. Poland Corporate n.a. n.a.

Sep-18 Palladium Moda Srl Italy Casualwear Made in Italy Fund Italy Private Equity 8.7 0.8

Sep-18 Malo SpA Italy Cashmere clothing Walter Maiocchi, Mario Stangoni

Italy Private Investor

n.a. n.a.

Sep-18 Gianni Versace SpA* Italy Apparel Capri Holdings Limited US Corporate 668.0 44.6

Sep-18 Woolrich Italy/ UK Outdoor lifestyle apparel L-Gam UK Private Equity 180.0 n.a.

Oct-18 Moda Italia Srl, International Promo Studio Srl **

Italy Sportswear Star Capital SGR SpA Italy Private Equity 39.6 9.9

Oct-18 Slowear SpA* Italy Casualwear N.U.O. Capital Italy Private Equity 50.6 5.1

Nov-18 Gimel Srl Italy Childwear Italglobal Partners Srl Italy Private Equity (70%) 17.5 2.7

Main deals in Fashion & Luxury – 2018


Main deals in Fashion & Luxury – 2018



Target EBITDA

FY17 (€m)

Shoes & accessories

Jan-18 Gruppo River SpA Italy Casual shoes Consilium SGR SpA Italy Private Equity 23.5 6.5

Feb-18 Garmont Srl Italy Technical footwear Luigi Rossi Luciani Italy Private Investor (21%) 14.2 1.1

Feb-18 Alba Shoes Group SHPK Albania Shoes Consilium SGR SpA Italy Private Equity 10.3 n.a.

Mar-18 Fukui Megane Industry Co. Ltd.

Japan Eyewear Luxottica Group SpA Italy Corporate (67%) 15.0 n.a.

May-18 Finest Shoes Srl Italy Premiun shoes Alcedo SGR SpA Italy Private Equity 13.4 2.1

Jun-18 Barberini SpA Italy Eyewear Luxottica Group SpA Italy Corporate 73.3 23.8

Jun-18 Lancel International S.A. France Leather goods Piquadro SpA Italy Corporate n.a. n.a.

Sep-18 Seven SpA Italy Backpack and accessories manufacturer

Green Arrow Capital SGR SpA

Italy Private Equity (55%) 62.2 12.6

Nov-18 A. Testoni SpA Italy Apparel Sitoy Group Holdings Limited

Hong Kong Corporate (95.35%) 28.7 (5.3)

Dec-18 Calzaturificio Scarpa Italy Shoes manufacturer Cornaro Holding Srl Italy Buyback 95.9 14.8 Other

Jan-18 YOOX Net-A-Porter Group* Italy E-tailer Compagnie Financiere Richemont

Switzerland Corporate (75.03%) - OPA

2.091.0 160.0

Jan-18 Effeuno Srl Italy Leather goods Furla SpA Italy Corporate (70%)

107.0 4.2

Jan-18 SPM Pressofusione Srl Italy Apparel components Riri Group SA Switzerland Corporate 4.0 1.1

Feb-18 Atex SpA Italy Textile EOS Investment Management Limited

United Kingdom Private Equity and Management

16.3 (0.1)

Feb-18 City Prints, Premier Fabrics US Printed textiles Imprima SpA Italy PE add-on 23.0 n.a.

Mar-18 Gruppo Coin SpA*** Italy Retail of apparel and accessories

Centenary SpA Italy Management 1.472.5 177.6

Mar-18 Millefili SpA Italy Textile Alto Partners SGR SpA, Daniele Selleri


Apr-18 Fast value global inc. Japan Apparel components Mainetti Group Italy Corporate 6.0 n.a.

Apr-18 Comero SpA Italy Apparel components Successori REDA SpA Italy Corporate 15.1 (0.8)

May-18 Cf&P Srl Italy Manufacturing of luxury leather goods

Burberry Group Plc United Kingdom Corporate 80.9 3.6

May-18 Canepa SpA Italy Textile DeA Capital Alternative Funds SGR


68.5 (4.0)

Jun-18 Conceria Miura Srl Italy Leather manufacturer Gruppo Peretti Italy Corporate 30.2 3.4

Jul-18 Lanificio Fratelli Cerruti Italy Textile Njord Partners LLP United Kingdom Financial Investor (80%)

41.8 (1.8)

Oct-18 Lisa Corti Srl Italy Textile Cadaxx SAS France Financial Investor

1.7 0.0

Oct-18 FGF srl Italy Leather and metallic accessories

Bravo Capital Partners Luxembourg Private Equity 12.7 2.6

* Consolidated financial report ** Aggregated figure *** Consolidated finanncial report as at 31/01/2018


Financial investors are leading M&A transactions in the Furniture & Design segment, with 22 deals on a total of 29 in 2018 (vs. 18 in 2017).

In 2018 financial investors showed an increased interest in the Furniture & Design industry, resulting in 29 acquisitions completed, including 5 add-ons:

• Italian Design Brand (investment holding created in 2015 by Private Equity Partners, aggregating brands like Gervasoni, Very Wood and Meridiani), added Saba Italia sofas and Davide Groppi lighting solutions to its portfolio;

• Investindustrial and Carlyle contributed to the newco Design Holding their furniture and design portfolio companies Flos, B&B Italia and Louis Poulsen (acquired in July), with the intent to create

a hub of high quality design players and support their international expansion;

• Presotto Italia (furniture) was acquired by Ibla Capital;• Calligaris (chairs and home furnishings) was

invested in by Alpha (80%); • iDea Corporate Credit Recovery II acquired a majority share in Snaidero, with the purpose to carry out a turnaround process. Lighting living a deep transformation

Lighting segment is currently in a deep transformational phase, driven by LED technology and digital evolution. Increasing R&D investments are focused on creating spectacular light effects, aimed at consolidating the parallel between illumination and wellness and integrating the Internet-of-Things into lighting solutions.

After some rumors about a possible IPO, one of the most R&D focused Italian lighting companies (ca. 7% of revenues), iGuzzini Illuminazione, was acquired by the Swedish market leader Fagerhult AB, confirming the attractiveness of Italian companies active in the sector.

Fashion players are looking with increasing interest to food service chains either for portfolio diversification or to pursue a brand extension strategy.

Ceramics and home appliances drove 9 deals, mainly led by corporate investors

Increasing R&D investment was also a theme in the Ceramics segment, positively impacted by the deployment of the «Factory 4.0». Among the 3 deals announced in 2018, the strategic alliance between Italcer SpA and Rondine SpA, completed withthe intent to create a large player, with a higher competitive potential on a global scale. Focus on sustainability and research also represent the key success factors for the relaunch of Gruppo Ceramiche Ricchetti, acquired by QuattroR.

“Smart devices” concept, e.g., devices developed for home appliances, is evolving to a wider concept of “home automation systems”, related to furniture, home equipment and house infrastructures: Nice SpA, market leader in the segment, consolidated its global presence and expanded its product portfolio throughthe acquisitions of V2 and Fibar.

The 4 ‘musts to grow’: our expected trends

• Work on materials and waste recycle, to create unique furnishing accessories and preserve environmental sustainability;

• Connect luxury and fashion concepts to the furniture & design business;• Deploy “accessible design” through Private Label

and new distribution models (e.g., franchising);• E-commerce exploitation to grow in international

markets, through the development of innovative applications combining design and customisation with high quality manufacturing.

Furniture & Design

by Maria Teresa Ceglia

25



Target EBITDA

FY17 (€m)

Feb-18 Presotto Industrie Mobili SpA

Italy Furniture Ibla Capital Italy Private Equity (95%)

n.a. n.a.

Feb-18 Eurofiere SpA Italy Temporary architectures for trade fares

EOS Investment Management Limited

United Kingdom

Private Equity 30.8 2.7

Mar-18 Artemest Srl Italy Online provider of home decor

Cheng family, Italian Angels for Growth, Rancilio Cube S.r.l., N.U.O. Capital, Bagheera Holding


1.4 (0.4)

Mar-18 Davide Groppi Srl Italy Decorative illumination products

Italian Design Brand (Private Equity Partners)


Apr-18 LF SpA* Italy Household furniture The Riverside Company US Private Equity 83.0 10.9

Apr-18 Sozzi Arredamenti Srl Italy Wood furniture N.U.O. Capital Italy Private Equity 26.4 (0.1)

Apr-18 Sitland SpA Italy Furniture Mezzalira Investment Group SpA Italy Financial Investor 21.4 0.9

May-18 Snaidero Rino SpA Italy Furniture DeA Capital Alternative Funds SGR

Italy Private Equity 102.2 (1.2)

May-18 Scrigno SpA Italy Doors Clessidra SGR SpA Italy Private Equity 48.7 7.7

May-18 Deko Srl Italy Cookwear Equilybra Capital Partners SpA Italy Private Equity 12.0 2.6

Jun-18 Battaglia Srl Italy Interior design Giorgetti SpA Italy PE add-on 19.5 1.7

Aug-18 Calligaris SpA* Italy Furniture Alpha Group France Private Equity (80%)

124.0 19.8

Aug-18 Sciuker Frames Italy Windows Listing on AIM IPO 8.9 2.1

Sep-18 Venini SpA Italy Artistic Murano glass

Damiani SpA Italy Corporate (29%)

10.8 0.6

Sep-18 Mobil Project SpA Italy Contract furnishing services for the hospitality industry

EXA Srl Italy PE add-on 34.3 5.1

Sep-18 Bodino Srl* Italy Fit-out works 21 Partners SpA Italy Private Equity (70%)

26.5 6.8

Sep-18 Louis Poulsen Lighting, B&B Italia SpA, Flos SpA*

Italy Household electrical appliances

Design Holding (Investindustrial & Carlyle)

US Private Equity 413.4 95.4

Oct-18 Tor Art Srl Italy Design Pierce Protocols Ltd United Kingdom

Corporate (51%)

1.0 0.5

Oct-18 Saba Italia Srl Italy Furniture Italian Design Brand (Private Equity Partners)


Dec-18 iGuzzini illuminazione SpA*

Italy Lighting AB Fagerhult Sweden Corporate 232.3 31.5

Home appliances

Jul-18 Fibar Group SA Poland Home automation systems

Nice SpA Italy Corporate 28.9 n.a.

Jul-18 DPS Group Srl (8 former Trony stores)

Italy Electrical appliances

Unieuro SpA Italy PE add-on n.a. n.a.

Aug-18 V2 SpA* Italy Home automation systems

Nice SpA Italy Corporate 29.7 4.1

Sep-18 Candy SpA* Italy Household electrical appliances

Qingdao Haier Co. Ltd. China Corporate 1.147.7 50.5

Oct-18 Galimberti SpA (5 stores) Italy Electrical appliances

Unieuro SpA Italy PE add-on 181.9 (31.2)

Jun-18 MEB SpA* Italy Electrical appliances

Adolf Wurth GmbH & Co. KG Germany Corporate 106.5 n.a.

Ceramics

Jun-18 ABK Group Industrie Ceramiche SpA

Italy Ceramics Capital for Progress 2 SpA*** Italy Financial Investor 107.3 22.2

Aug-18 Gruppo Ceramiche Ricchetti*

Italy Ceramics QuattroR SGR SpA Italy Private Equity (62.41%)

162.2 (2.0)

Oct-18 Rondine SpA* Italy Ceramics Italcer SpA Italy PE add-on 110.1 24.5

* Consolidated financial report ** Aggregated figure *** Listed Special Acquisition Vehicle

Main deals in Furniture & Design – 2018

27

The Specialty Retail sector witnessed 19 deals in 2018 (vs. 10 in 2017), of which 5 inbound. 8 deals involved corporates and 3 deals were add-ons of portfolio companies of financial investors.

Restaurants and casual dining chains remain on the menu of Private Equity

Restaurants and casual dining sectors have seen a sharp increase in 2018 with a total of 14 M&A transactions versus 5 in 2017.

Greater levels of disposable income, or at least increased consumer spending confidence, drove upward trends in eating out in Italy. Casual dining chains proved to be more resilient than traditional restaurants through tough economic periods.

Food-service related deals included transactions in the fine dining segment (Cipriani and Langosteria) and casual dining chains such as Panini Durini, Rossopomodoro, El Rancho, Dispensa Emilia, Temakinho, MiScusi, comprising traditional as well as innovative formats.

Based on the size of the target companies, investors included private individuals (fine dining segment), club deals (Panini Durini invested by Astraco), private equity (Rossopomodoro acquired by the UK based OpCapita LLP, Dispensa Emilia acquired by Investindustrial) and add-ons of private equity investments (Cigierre, retail chain owned by BC Partners, invested in El Rancho, Temakinho and Pony Zero, an Italian start up involved in the food delivery sector).

Drivers of Private Equity investments as well as add-ons have been the capability to deploy a successful format on an international scale and the possibility to replicate best practices and methodologies in other brands, leading to profitability improvements.

Fashion players are looking with increasing interest to food service chains either for portfolio diversification or to pursue a brand extension strategy.

Following the example of other European countries, Italy unlocked corporate investments in retail pharmacies.

In 2017 significant regulatory changes allowing corporate entities to enter the retail pharmacy business were approved, leading to a revolution in the sector expected to generate opportunities for financial investors. First signals in this direction are:

• the acquisition of Gruppo Farmacrimi (13 pharmacies and 12 para-pharmacies) by F2i,

with the ambition to established a c. €500 million network;• the opening of a Boots pharmacy in Milan by

Walgreens Boots (the company acquired other 8 pharmacies from the bankruptcy of the chain

Essere & Benessere that will be likely converted to the Boots brand);• the announcement of Penta Investments, a Czech

private equity, investment in Dr. Max, a network of 1,000 pharmacies in Eastern Europe to launch its

chain in Italy, with an investment of around €1bn;• other national groups are moving, but the shopping

is proceeding slowly (i.e. Hippocrates, Unifarco, Unico, Cef e Admenta Italia).

Our view is that quite a long time will be required for consolidation in this sector which is highly fragmented, with single pharmacies family managed and with expected high valuations.

The current framework is however still subjectto changes for pressures from lobbies of traditional pharmacists against the deregulation. Discussions are ongoing to enact restrictions to pharmacy ownership in the same region (from the current 20% down to 10%).

Specialty Retail

by Caterina Moliterno




Target EBITDA

FY17 (€m)

Restaurant chains

Feb-18 Le Crobag Gmbh & Co. KG Germany Fast food cafes Autogrill Deutschland Gmbh Italy Corporate 56.6 n.a.

Mar-18 Sebeto SpA* - Rossopomodoro

Italy Restaurant OpCapita LLP United Kingdom


Apr-18 El Rancho SA France Restaurant Cigierre SpA Italy PE add-on n.a. n.a.

May-18 Alajmo SpA Italy Restaurant Leeu Marketing International Limited South Africa Corporate (10%)

13.4 1.0

Jun-18 Alajmo SpA Italy Restaurant Alajmo family Italy Buyback (25%)

13.4 1.0

Jun-18 Cipriani Restaurant Group Italy Restaurant Giuseppe Cipriani Italy Buyback (16%)

n.a. n.a.

Jul-18 Dispensa Emilia Italy Restaurant InvestIndustrial United Kingdom


Jul-18 PanB Italy Restaurant Rovagnati SpA Italy Corporate 0.9 0.1

Jul-18 Panini Durini Italy Restaurant Astraco Italy Financial Investor (75%)

9.2 0.1

Oct-18 Temakinho Italia Srl Italy Restaurant Cigierre SpA Italy PE add-on 17.7 1.6

Oct-18 Langosteria Holding Srl Italy Restaurant Remo Ruffini Italy Private Investor (40%)

1.2 0.1

Oct-18 Foodora Italia Italy Food delivery Glovo Spain Corporate n.a. n.a.

Nov-18 Pony Zero Srl Italy Food Delivery Cigierre SpA Italy PE add-on 1.9 (0.7)

Nov-18 MiScusi Italy Restaurant Milano Investment Partners, Picus Capital


4.5 n.a.

Specialty retailers

Jan-18 Cellular Italia SpA Italy Accessories for smartphone

Crescita SpA Italy SPAC (49.87%)

157.1 39.7

Mar-18 Yesmoke Srl Italy Cigarettes manufacturing

Swiss Merchant Corporation SA Switzerland Financial Investor

n.a. n.a.

Jul-18 Portobello SpA Italy Retailer and advertising service provider (barter)

Listing on AIM IPO 10.0 0.5

Sep-18 Farmacia Nuova, Farmacia del Vivo, Farmacia dell’Ospedale di Lavagnini

Italy Pharmacy chain Lidea SpA Italy Corporate n.a. n.a.

Oct-18 Gruppo Farmacrimi Italy Pharmacy chain F2i SGR SpA Italy Private Equity 9.0 0.4

*Consolidated financial reported

Our expected trends

• The growth of food-service segment could be slowed down by the Italian economic and political scenario and the threatened introduction

of legislation for Sunday closure of shopping malls;• Chained food service formats have expanded their

borders to high cuisine with (i) well-known chefs starting collaborations with retail chains

for accessible formats in travel locations and (ii) Asian food small chains moving from a low price/low quality positioning to medium/high price and quality formats in city centers leveraging on service, style and locations;

• Following the new dictates of healthy nutrition and rediscovery of traditional food, new formats of food retail chains are beginning to take root

(vegan/veggie, pasta), as well as artisanal pastry shops and ice cream parlours;

• Law 124/2017 brought a strong wind of liberalisation in the Italian pharmacy market that will boost

a wave of M&A activity targeting the Italian pharmacy business in the coming years, including penetration of foreign corporates. Attention should be given to monitor any possible restrictions which may be enacted in the future.

Main deals in Specialty Retail – 2018

Specialty Retail

by Caterina Moliterno


Deals in entertainment (12 in 2018 vs. 14 in 2017) mainly referred to football teams and to the gaming segment.

The Italian football sector has been targeted by both financial and private investors. One of the main deals completed in 2018 relates to the acquisition of AC Milan by the US-based hedge fund Elliott from Mr. Li Yonghong, the China-based private investor. Smaller transactions involved other football teams such as Bari Calcio acquired by an entrepreneur (Aurelio De Laurentis), Palermo Calcio acquired by Sport Capital Group (UK Corporate) and Monza Calcio acquired by Fininvest Group.

The consolidation process is still ongoing in the gaming sector, with Gamenet reinforcing its betting platform through the acquisition of Goldbet (deal value of €0.3bn) and Playtech plc, completing the acquisition of a majority stake in Snaitech S.p.A. (EV of €0.8bn).

The gaming sector has been heavily impacted by Government restrictions such as the ban of advertisements (eg. “Decreto dignità” enacted during summer 2018) and various tax increases (the latter provided in the 2019 Budget Act). The revised and constantly changing regulatory environment could represent a threat for new investments in the sector and have a negative impact on multiples.

The Italian Travel & Hospitality sector (17 deals in 2018 vs. 11 in 2017) attracted both Italian and foreign corporate investors, confirming the positive trend shown in prior year.

Alpitour, invested by Tamburi Investment Partners, has been one of the key players in the tour operator segment with the acquisition of Eden Travel Group, targeting an IPO in the next 2/3 years.A number of Italian corporates (Uvet Viaggi Turismo S.p.A., Bluserena SpA etc.) have also consolidated their market position through domestic acquisitions.

Leisure

by Bianca Varcasia

Foreign investors have been focused on acquisitions of trophy real estate assets (Hotel Beverly Hills Rome from Almus Capital Ltd, Castello di Casole from Belmond Ltd, part of LVMH Group, Park Hotel Baia Sardinia from 12.18. Investment Management Gmbh).

Place your bets: our expected trends

• The full deployment of the changes in tax legislation will imply further difficulties for the gaming sector. Concentration trends are expected to hit the market in the near future, whereby smallest operators will

be forced to merge with largest players or alternatively shut down;• 2018 positive trend of M&A on hotels and tour

operators should be confirmed in 2019 following the increasing expenditure of domestic customers, making the Travel & Hospitality market attractive

for both domestic and foreign investors, helped by Italy’s high concentration of leisure and business

destinations and variety of segments (millennials, families, seniors);

• Food and Wine tourism offers untapped opportunities (with a potential still to be measured) for the Italian wineries and satellite tourism business, following the example of Napa Valley in California

or of the Wine Route in South Africa.

31



Target EBITDA

FY17 (€m)

Entertainment

Feb-18 D'Alessandro e Galli Italy Concerts promoter CTS Eventim AG & Co. KGaA Germany Corporate n.a. n.a.

Mar-18 Geoworld Srl Italy Toys Basic Fun! US Corporate n.a. n.a.

Mar-18 Vivo Srl Italy Platform for musical events

Clemente Zard, CTS Eventim AG & Co. KGaA

Italy, Germany Private Investor, Corporate

n.a. n.a.

Apr-18 Snaitech SpA* Italy Betting and gaming Playtech plc Isle of Man Corporate (70.561%)

884.2 132.7

Jun-18 Brevi Milano SpA Italy Babycare products PHI Asset Management Partners, SGEIC

Spain Private Equity 20.0 n.a.

Jul-18 FC Bari 1908** Italy Football Aurelio De Laurentiis Italy Private Investor 15.9 (1.7)

Jul-18 GoldBet Srl Italy Gaming and betting Gamenet SpA Italy Corporate 199.4 40.0

Jul-18 AC Milan SpA** Italy Football Elliott Management Corporation

USA Financial Investor

194.4 (10.4)

Jul-18 Ascoli Picchio F.C. 1898 SpA**

Italy Football Bricofer Italia SpA Italy Corporate 15.9 2.4

Sep-18 S.S. Monza 1912 Srl Italy Sport society Fininvest SpA Italy Financial Investor

n.a. n.a.

Oct-18 Zoom Torino SpA Italy Zoologic park Casetta Family Italy Private Investor 1.5 0.8

Dec-18 U.S. Citta di Palermo SpA*

Italy Sport society Undisclosed bidder United Kingdom n.a. 79.4 21.4

Travel & Hospitality

Feb-18 Hotel Beverly Hills Rome Italy Hotel Almus Capital Limited United Kingdom Corporate n.a. n.a.

Feb-18 Castello di Casole Italy Hotel Belmond Ltd. - LVMH Group United Kingdom Corporate n.a. n.a.

Feb-18 Piazza di Spagna View Italy Hotel iH Group Srl Italy Corporate 32.4 2.3

Feb-18 Lido Palace Hotel Italy Hotel Excelsior Palace Hotel (Rapallo)


Feb-18 Quadratec Srl - QC Terme

Italy Spa/ Hotel Giuturna Investments SpA Italy Financial Investor (47%)

9.3 0.8

Mar-18 Select Italy US Tour operator Uvet Viaggi Turismo SpA Italy Corporate n.a. n.a.

Apr-18

Calaserena Village, Serena Majestic Hotel Residence, Serene Village

Italy Hotel Bluserena SpA Italy Corporate n.a. n.a.

Apr-18 Royal Travel Jet Sardegna Srl

Italy Luxury resort Portale Sardegna SpA Italy Corporate (51%)

4.5 0.2

Apr-18 Eden travel group Srl Italy Tour operator Alpitour SpA Italy PE add-on (shareholder TIP)

357.9 7.4

May-18 Alpitour SpA* Italy Tour operator Tamburi Investment Partners SpA, Andrea Levi

Italy Private Equity (38.8%)

1.224.3 37.0

Jul-18 Condor Srl Italy Tour operator Uvet Viaggi Turismo SpA Italy Corporate 15.2 (0.0)

Jul-18 Valtur SpA Italy Holiday resort operator

Nicolaus Tour Srl Italy Corporate n.a. n.a.

Jul-18 Sostravel.com Italy Online tour operator Listing on AIM IPO n.a. n.a.

Sep-18 Itacosmer SpA - Park Hotel Baia Sardinia

Italy Hotel 12.18. Investment Management GmbH

Germany Corporate n.a. n.a.

Sep-18 Musement SpA Italy Online tour operator TUI AG Germany Corporate 8.5 (5.1)

Nov-18 Club del Sole Srl Italy Camping sites NB Aurora S.A. SICAF-RAIF Luxembourg Private Equity 38.4 4.9

Nov-18 Castello del Nero SpA Italy Hotel and restaurants Leisure Ventures Pte Ltd Singapore Corporate 7.3 0.8

* Consolidated financial report** The value reported reders to Value of Production

Main deals in Leisure – 2018


Deals by geography

Top 5 Regions

Deals by area and investor type

Deals by area and relative dominant sector

Strategic Financial

Outbound

South & Islands

Centre

North-East

North-West 37

26

27

6

15

15

25

5

5

51deals in Lombardy

30deals in Veneto

23deals in Piedmont

26deals in Emilia-Romagna

12deals in Tuscany

41

North-West

Food

78

39%Centre

Food

52

25%

Outbound

Fashion & Luxury

20

10%

North-East

Food

41

20%

South & Islands

Specialty retailers and Leisure

11

6%

33

Outbound deals trend

Deals by geography

by Luciana Sist and Matteo Gubitta

The vast majority of targets of Consumer deals announced in 2018 are based in Northwestern Italy (78 out of 202), followed by Central Italy (52). Outbound Consumer investments included two blockbuster deals carried out by Ferrero and Parmalat.

North-West

The lion’s share in terms of number of deals goes to the North-West of Italy, with 78 announced transactions, representing c. 40% of total deals (202). Lombardy led the pack with 51 deals, followedby Piedmont (23).

Targets based in the North-West of Italy attracted 30 international (15 strategic and 15 financial investors), and 48 domestic buyers (22 strategic and 26 financial investors). Most of the deals involved targets engaged in the Food & Beverages segment (26), followed by Fashion & Luxury (14) and Furniture & Design (13). 3 blockbuster deals announced in 2018 involved targets based in this area: the acquisition of the fashion e-tailer YNAP by the Swiss Compagnie Financière Richemont, and the strategic acquisitions of Candy by the listed Chinese Qingdao and of Gianni Versace by the US corporate Michael Kors Holding.

Centre

The Centre of Italy saw 52 announced Consumer deals (c. 25% of the total), with Emilia-Romagna accounting 26, followed by Tuscany 12. Deals announced in Central Italy attracted 16 international (9 strategic and 7 financial investors) and 36 domestic buyers (18 strategic and 18 financial investors). Deals were concentrated on Food & Beverages segment (16) and Fashion & Luxury (13). The acquisition of the ham producer, Grandi Salumifici Italiani, from Unibon, was the largest R&C deal announced in this area in 2018.

North-East

The North-East of Italy contributed 41 announced deals, 20% of the total, with Veneto being the 2nd region in Italy in terms of number of deals (30), followed by Friuli-Venezia Giulia (9). Deals announced in North Eastern Italy attracted 14 international (10 strategic and 4 financial investors) and 27 domestic buyers (16 strategic and 11 financial investors). Most of the deals involved targets in the Food

& Beverage segment (23, being 56% of the total deals of the region vs an average national weighting of 38%), Furniture & Design (8) and Fashion & Luxury (6). The most relevant transactions were the management buyout of Gruppo Coin, the minority investment of 21 Investimenti in Casa Vinicola Zonin and the minority investment by Idea Taste of Italy in the wine producer Casa Vinicola Botter.

South & Islands

South & Islands hosted 11 announced deals, 6% of the total. Deals were mainly concentrated in Campania (4), Sardinia (2) and Apulia (2). Most relevant transactions took place in Campania: the acquisition of the pizzeria chain Rossopomodoro from the Private Equity fund OpCapita and the minority investment of Italmobiliare in the coffee producer L’Aromatika Srl (Caffè Borbone).

Outbound

20 outbound deals were announced in 2018, 15 of which from strategic investors. The largest deals announced were the €2.3bn acquisition of Nestlè US confectionary business by Ferrero and the €1.1bn acquisition of the natural cheese business of Kraft Heinz Canada on behalf of Parmalat.

50%

35%

5%

10%

Europe 10 deals

North America7 deals

Australia1 deal

Japan2 deal


Maximise returnswith Value Creationin Deals approach#beyondthedeals

35

Dealmakers are under increasing pressure to deliver more value from each deal they do

To make the task harder, turbulence in global stock markets is creating uncertainty around valuations, while companies are wrestling with challenges such as keeping up with technological change or moving at speed into new and untested markets.

Our conversations with corporate executives, collected through a Survey with 600 senior corporate executives show that many acquisitions and divestments don’t maximize value.

Instead companies that genuinely prioritise value creation early on – rather than assume it will happen as a natural consequence of the actions they take as the transaction proceeds – have a better track record of maximising value in a deal.

Value Creation in Deals

by Cristiano Valpolini and Raffaele Cestari

The approach to the Value creation sits around 3 pillars

Stay true to the strategic intent: • Broader portfolio strategy rather than opportunistic deals• Direct correlation between value creation and investments in post deal integration

Be clear on all the elements of a comprehensive value creation plan:Technology plan• Sinergy plan• Integration plan• Working capital• Tax and legal structure

Put culture at the heart of the deal: • Keeping people and cultural aspects upfront in planning is fundamental. • Wide engagement and communication of the value

creation plan will help retain and build buy-in from key personnel. Failing to plan for cultural change will significantly undermine the value created.

Value creation in Italian Consumer M&A Market

Deals announced in 2018 in the Italian consumer space offer good examples of how Private Equity and corporates can take advantage from clear value creation approaches:

• the acquisition of Candy by the Chinese white goods player Haier was planned according• to specific and clear pillars: the integration of Haier’s

technology platform with the brand philosophy and European penetration of Candy, while having Internet of Things as a central strategic foundation;

• Dutch Dobla’s acquisition by pastries and ice cream ingredient producer Irca (invested by Carlyle) was solidly founded on relevant synergy opportunities: geographical coverage, operational and supply opportunities. Such a robust and clear vision also contributed to anticipate other potential bidders;

• The acquisition of Nicole Spose, the Italian wedding dress manufacturer, by Pronovias (invested by BC Partners) foresaw a clear and solid value creation plan, including all potential synergy initiatives.

In order to unlock the potential of their investments, these buyers have started working on their Value Creation plan from Day 1 since the acquisition.

What were your priorities on Day One and what should they have been?

Should have been prioritised Actual priorities

of buyers believe their last acquisition created value, however...

61%

underperformed their industry peers, on average, over 24 months following completion of their last deal

53%

of divestors underperformed their industry peers, on average, over 24 months following completion of their last deal

57%

Value Creation 66%34%

Operational stability 48%53%

Client/customer retention 44%35%

Human capital optimisation 19%14%

Talent retention 11%8%

Changing operating model 10%26%

Rebranding 2%30%

0% 20% 40% 60%

37

Explosive growth of data, a greater hunger for information and availability of more powerful technologies are fueling increased expectations of data usage and are driving the uptake of Analytics in Deals, especially in Consumer

Businesses are producing more data from new sources. Volumes of both structured and unstructured data are increasing and the amount of data in the digital universe is doubling every two years.

In this Deals landscape, investors are expecting greater transparency, and more granular insight is required together with greater substantiation of the equity story. Management are also expected to understand and leverage all of their data to provide faster and more precise responses.

The Italian D&A team is expert in finance, deals and analytics, and has a unique skill set which leverages on four Global Centers of Excellence and the PwC D&A International network. We have a unique combination of core skills and deep expertise placing us at the intersection of commercial, financial and technical specialisms.

Data Analytics in Deals

by Francesco Terenzi

We use a wide range of advanced analytical and visualization tools and techniques to answer our clients’ difficult questions, deliver insight and support key investment decisions.

Consumer industry competences

In the Consumer arena, data volumes are huge and continue to accelerate rapidly. This trend is increasing the need of investors and management to better understand the value of this data and gain insight from it in order to take decisions swiftly, accurately and with confidence.

We assist our clients in all phases of the M&A process, by performing analytics of revenues, costs, and KPI’s. Our interactive tools are user friendly and allow a super fast understanding of value drivers and integration into any business plan model.

We also utilize a range of tools to perform predictive analysis, store database analysis, geo-localization of stores and identification of white spots, in-depth analysis on product portfolio, webscraping analysis,and we can deliver a wide range of customized analytics.

Deal Analytics

Combining deal experience and advanced technology and analytics

Origination and strategy

Close andvalue realisation

Preparationandexecution

Real-time intelligenceInteractive insights visualized at deal speed

Benefits

One holistic approachGranular business performance analytics from a common data model

Value captureProprietary technology and analytics to realize your strategy

Clarity and confidenceActionable, trustworthy advice from deep deal and industry experience

Deallifecycle


Food, Beverages and Personal Care deals

• Acquisition of Bertagni 1882 SpA by Ebro Foods SA • Acquisition of Monviso SpA by Cerea Capital and Capzanine • Acquisition of Grandi Salumifici Italiani SpA by

Unibon SpA • Acquisition of Dobla B.V. by IRCA SpA • Acquisition of Mille Sapori Plus by Inalca SpA • Acquisition of Nestlé (US confectionery business)

by Ferrero SpA

Fashion & Luxury, Furniture & Design, Specialty Retail and Leisure deals

• Acquisition of Nicole Fashion Group SpA by

Pronovias S.A. • Acquisition of Finest Shoes by Alcedo SGR • Acquisition of Gianni Versace SpA by Capri Holdings Limited • Acquisition of Gruppo Coin by Centenary SpA • Acquisition of Re/ Done by Style Capital SGR • Acquisition of Sebeto SpA (Rossopomodoro) by

OpCapita LLP • Acquisition of Dispensa Emilia by InvestIndustrial • Acquisition of Temakinho Italia Srl by Cigierre SpA • Acquisition of Pony Zero Srl by Cigierre SpA • Acquisition of GoldBet Srl by Gamenet

Our 2018 Consumer credentials

PwC Deals thanks its clients for their continued trust

• Acquisition of Casa Vinicola Botter by DeA Capital Alternative Funds

• Acquisition of Divici Società Agricola Srl by

Ruffino Srl • Acquisition of Casa Vinicola Zonin SpA by 21 Investimenti • Acquisition of Mars drinks by Luigi Lavazza SpA • Acquisition of Deborah Group Srl by Gruppo Sodalis Srl

• Acquisition of Musement SpA by TUI AG • Acquisition of MEB SpA by Adolf Wurth Gmbh • Acquisition of Candy SpA by Qingdao Haier Co. Ltd • Acquisition of Louis Poulsen Lighting, B&B Italia

SpA, Flos SpA by Design Holding • Acquisition of iGuzzini Illuminazione SpA by AB Fagerhult • Acquisition of Eurofiere SpA by EOS Investment

Management Limited • Acquisition of LF SpA by The Riverside Company • Postd Deal services after the investment in Scrigno

SpA by Clessidra SGR

40 Dedicated professional in Italy

5 5 segments: Food & Beverages, Personal Care & Cosmetics, Fashion & Luxury, Furniture & Design and Specialty Retail & Leisure

Strong relationships with PwC global Retail & Consumer network and sector specialists

Multidisciplinary and integrated approach (Financial, Strategy, Operations, Corporate Finance, Crisis, M&A Tax)

Direct relationships with the main investors and Private Equity houses, both Italian and international

Presence in the most relevant transactions

Italian Consumer Deals Team

Emanuela PettenòPartner | Transaction Services Consumerand Market Deals Leader

[email protected]+39 348 8519841

Raffaele CestariPartner | Value Creation in Deals


Giovanni TinuperPartner | Transaction Services and Data Analytics Leader


Fabrizio Franco De BelvisAssociate Partner | Strategy


Elena BorghiAssociate Partner | Transaction Services


Pier Paolo FerrandoPartner | M&A


©2019 PricewaterhouseCoopers Advisory SpA. All rights reserved. PwC refers to PricewaterhouseCoopers Advisory SpA and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general inforamation purposes only, and should not be used as a substitute for consultation with professional advisors.

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