Deoleo’s shares were down more than 9% on the stock market around 9:45 a.m. this Thursday, after the company gave the green light to the proposed purchase presented by Dcoop and Acesur, in a transaction that values the group at 520 million euros.
In particular, the shares of the Hojiblanca and Carbonell manufacturer fell by 9.25%, to 0.314 euros per share.
Before the market opened, it was reported that Dcoop and Acesur have beaten Migasa and the Italian company Coricelli in the competitive process to take over Deoleo.
Deoleo and its reference shareholders have given their support to the offer from the Spanish consortium for its “attractive and solid financial backing,” as well as for the “high level of execution certainty that guarantees this transaction,” and for the good visibility regarding the deadlines expected for completion.
The group that markets Hojiblanca and Carbonell highlighted in a statement that this strategic agreement strengthens and projects Spain’s international leadership in the agri-food industry.
Along these lines, the company notes that Acesur and Dcoop, with a “deep-rooted connection to Spanish olive-growing tradition,” provide a “strong connection to the source, great agricultural capillarity and a notable production capacity,” elements that fit with Deoleo’s “consumer packaged goods marketing” and its commercial networks abroad.
A Spanish oil giant
In a communication sent to the Comisión Nacional del Mercado de Valores (CNMV), Deoleo has detailed the terms of the transaction, which will give rise to a Spanish oil giant.
Deoleo’s board of directors has signed a binding share purchase contract with Acesur and Dcoop to transfer approximately 91.99% of the share capital of its subsidiary Deoleo Holding, a percentage that includes the 50.99% it directly holds in the listed company and that could be increased to 100% if other partners are added.
The company stated that the transaction entails a value for Deoleo Holding of 520 million euros, referring to 100% of its capital.
Through this transaction, Deoleo will transfer its entire stake in Deoleo Holding, and the buyers will indirectly control the operating business developed by the subsidiary and its dependent companies.
The definitive consideration that Deoleo will receive for its 50.99% will be set based on the value of the equity attributable to that stake, once the company value has been adjusted for the net financial debt existing on the closing date, as well as for any excess or deficit of working capital and other customary items, in accordance with the mechanisms provided for in the contract.
For guidance purposes only, the company calculates that the value of the equity attributable to its 50.99% could be in the range of between 190 and 200 million euros, before deducting the amounts retained as a guarantee.
The company has specified that this is an illustrative estimate, subject to changes at the time of closing, and has clarified that the agreed amount does not grant preferential or additional payment rights to the holders of the warrants issued in the capital increase of May 2020.
In addition, the parties have agreed that part of the consideration will be immobilized in a custody deposit account in the name of the sellers, in order to cover the tax contingency that affects Carapelli Firenze in Italy.
If the 100% of Deoleo Holding is ultimately sold, this deposit could reach a maximum of up to 80 million euros for all the selling partners, of which Deoleo would be entitled to an approximate maximum of 40.8 million euros for its 50.99%.
Timelines, authorizations and conditions
The effective closing of the transaction is conditional on authorization by the competition authorities of Spain and the United States, as well as on the approval of the Government of Italy regarding direct foreign investments.
Deoleo estimates that the process to obtain all of these approvals will take between six and eight months.
During this transitional period, the manufacturer of Hojiblanca and Carbonell has emphasized that management, the production plants, and commercial activity will continue to develop normally.
The transaction will also need the approval of Deoleo’s general shareholders’ meeting. In this regard, the Ole Investments fund, owner of 56.96% of the share capital, has already signed an irrevocable commitment to vote in favor.
The contract is also conditional on the Japanese group Mizkan not formally notifying within the next two months the termination of the license agreements for the Bertolli brand as a result of the change of control in the subsidiary.
The process has been advised by William Blair in the field of mergers and acquisitions (M&A) and by the law firm Latham & Watkins on the legal front.
The chairman of Deoleo, Ignacio Silva, has said that the transaction "recognizes the work carried out in recent years and the continued support of the majority shareholders, highlighting a portfolio of iconic brands that form part of our agrifood heritage".
He also highlighted that the alliance with Acesur and Dcoop "decisively reinforces Deoleo's leadership across the entire value chain of olive oil and provides operational certainty to producers and to the sector in general".
For his part, the group's chief executive officer, Cristóbal Valdés, has expressed his satisfaction with the agreement backed by the board of directors and has thanked the workforce for its involvement.
"Today we are a solid and highly attractive company, recognized for its commitment to quality, innovation and sustainability, and for its international distribution network guided by the Evoo-lution roadmap. This milestone opens a new stage built on solid foundations and with a long-term vision to continue creating value for the sector and all its stakeholder groups," he said.