The merger with Centrale Del Latte Di Torino (MI:CLT) is set to complete at the end of September: the businesses are highly complementary and the combination will add c 75% to sales, more than double EBITDA, and significantly enhance earnings. The 2016 outlook was subdued and the market in Northern Italy remains tough given the difficult consumer backdrop. We calculate a DCF-based fair value of €3.00 for the combined entity, which offers 8% upside from current levels.
CLF merger significantly expands the company
Centrale del Latte di Torino (CLT) has been acquisitive over the past 20 years, slowly increasing its geographic reach beyond the Turin area and throughout three regions in Northern Italy. The acquisition of CLF is its largest yet and will add Tuscany as a new region. In addition the Mukki brand (owned by CLF) is an attractive proposition and could be rolled out across CLT’s existing portfolio, and potentially beyond to international markets to which CLT has started exporting.
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