The board of debt saddled olive oil giant Deoleo has anointed a financial restructure offer from CVC Capital Partners which could see the private equity firm take over the Madrid-based company.
The global fund, which has its main office in London, focuses on management buyouts and its diverse portfolio includes fast food operators in China and Malaysia and a fast food and casual dining restaurant chain in Spain. Its €0.38 a share offer – four cents below Thursday’s closing market price – values Deoleo at €439 million.
Deoleo is hungry for investment because it has about €506 million in debt and needs capital to grow via what it sees as a promising new range of products. Meanwhile, various banks among its shareholders want to divest.
According to information published by Deoleo CEO Jaime Carbó on Thursday evening, the company’s board has greenlighted CVC Capital Partners’ proposal to first take an initial 29.99% stake in Deoleo followed by a bid for full ownership. The deal would also see the fund refinance Deoleo’s debt and its execution will depend on final agreement being reached by affected parties and ratification by Deoleo’s board.
The question over who will end up controlling the “Spanish” company has generated widespread media coverage in Spain in recent weeks, with concerns it would be sold to foreign interests and its portfolio of key brands including world leaders Bertolli, Carbonell and Carapelli split up. The issue became even more political when a joint venture involving an Italian state investment fund was known to be among the bidders.
Dcoop – the former Hojiblanca Cooperative Group and the world’s biggest producer of extra virgin olive oil – issued a statement lamenting that “Deoleo prefers a foreign investment fund” to its own bid, which was “based around the Spanish industry.”
Spanish concerns about the implications of foreign ownership of Deoleo for the country’s olive oil sector – expected to produce about half of total world production this season – come despite Deoleo itself stressing last November that it wants to position olive oil as a fast moving consumer good and to buy and package its oil in any part of the world it chooses.