Europastry suspends IPO for fourth time | Companies

Europastry has canceled its IPO two days before its debut scheduled for this Thursday, CNMV confirmed. This is the second time the company has called off going public this year and the fourth time it has suspended an IPO. Moreover, the entire operation was now much more advanced than in previous attempts.

“The Company and the selling shareholders have decided to withdraw the offer in response to the international geopolitical situation, which is causing deep instability in the markets. The company and its shareholders will continue to evaluate the possibility of going public when market conditions allow it,” explains Europastry in a statement sent to the stock market regulator.

It had to set the price on Tuesday, according to a brochure presented by the CNMV on September 26. Even the presence of Criteria Caixa, which committed to acquire 5% of the offering, did not contribute to achieving this goal. Their plans were to set the IPO price at between €15.85 and €18.75 per share, which would value the company at a maximum of $1.570 million. However, weak demand for shares derailed this attempt to list the company.

This IPO involved the issuance of approximately €210 million in new securities for the baked goods and frozen baked goods company. Added to this was the sale of its own shares worth almost 300 million euros, most of which belonged to the MCH fund, which sought to exit the company.

On the same Tuesday, XTB analysts had already placed the operation in the lower price range. According to its experts, “this is a very fragmented market with high competition, in which differentiation of individual products is difficult.” “This occurs in the context of geopolitical uncertainty and commodity movements, which influence stock market prices,” the analyst firm adds.

JP Morgan, UBS and ING acted as global underwriters for the transaction. Santander, CaixaBank, BBVA and Rabobank worked as bookrunners. Banca March and JB Capital at the third stage. On the legal side were Cuatrecasas, Davis Polk, Garrigues and Linklaters. PwC and Grant Thornton were listed as the company’s independent auditors.

Most attempts by Spanish companies to go public this year have been unsuccessful. Astara (Berge) canceled her debut this spring. They have also postponed their plans to list Tendam (Cortefiel), Hotelbeds or Volotea. At the moment, the only successful exit has been that of Puig, which is moving in volumes much higher than previous ones. It remains to be seen whether Cox will finally achieve its goal of raising €300 million through an IPO before the US elections, as announced this Monday, and whether Cirsa will dare to list the company.

The lack of IPOs in recent years is one of the issues causing concern in both the Spanish and European markets. Despite this, National Securities Market Commission (CNMV) President Rodrigo Buenaventura on Tuesday was optimistic about Puig’s debut this year, the biggest European stock market debut this year. “The fact that there are takeover offers is a positive, as long as there is a flow of new companies entering the market through IPOs that compensate for these exclusions,” Buenaventura assured.

In terms of the share sale, Europasty’s IPO stipulated that MCH would sell the 20.7% it retains in the company for a maximum of €248 million. The company’s CEO, Jordi Morral, will receive 18 million euros, and the family will receive a further 15 million euros, bringing their participation in the firm to 64.5% of the share capital.

Moreover, the company will still not be able to finance itself this way. As the Catalan company indicated in a brochure sent to the CNMV, Europastry will allocate 109 million euros to reduce debt, which will allow the company to remain at EBITDA levels of 2.5 times. The rest of the capital increase (EUR 89.6 million) is capital expenditure for the development of the bakery company. He pay the company’s expected stake after listing will be 30%. He free swimming the company was supposed to make up 30%, but so far everything remains in doubt.

Europastry is one of the largest bread and confectionery companies in Europe. This is the company’s fourth attempt to go public. He has already worked on IPOs in 2007 and 2019, in addition to a failed attempt before the summer. Then he introduced intention to enter the floating market (ITF)as in financial jargon the process that precedes going public is called, but without success. Finally, he decided to stop the operation on June 28 and wait for a better market window. If they achieved all their goals after the IPO, the company’s top executives could make around €40 million between salaries and bonuses.

Strong growth since 2019

After the 2019 attempt, Europastry took advantage of this to grow its business. It acquired Romanian company European Pastry and US companies Dawn Foods and The Muffin Mam to open its fourth plant in the US. It also expanded its plant in Azuqueca de Henares (Guadalajara).

The results of the Catalan group have not stopped growing in recent years. In the first semester, its turnover was more than 713 million euros, which is 7% more than in the same period last year. At the end of 2023, its turnover amounted to 1.347 million euros. That year, the company generated EBITDA of €116 million and net profit of €69 million. Net profit, on the other hand, decreased in the first half of the year (almost 33 million euros) compared to the period from January to June 2023 (almost 37 million euros).