Consumer goods company Breville Group (ASX: BRG) is scraping some of the froth off two years of COVID-induced sales growth to acquire an Italian outfit that has been designing, manufacturing and marketing premium coffee equipment since 1985.
Breville has entered an agreement to acquire 100 per cent of Castegnato-based LELIT for 113 million euros ($169 million), split with a 50-50 blend of cash and BRG shares with the latter subject to a five-year trading lock post-completion that will most likely occur by early July.
The Sydney-headquartered company expects the incorporation of LELIT, a rapidly growing disruptor in the premium Italian-made espresso machine and grinder market, will complement its award-winning coffee portfolio and give the Italian brand an opportunity to strengthen its presence outside of Europe.
"The acquisition of LELIT brings together the two great coffee cultures of the world: Italy and Australia," says Breville Group CEO Jim Clayton.
"Both companies have a shared passion for using product innovation to improve our customers’ coffee experience at home, and we look forward to working alongside LELIT and its existing partners to further accelerate its growth and product innovation, while preserving the values that underpin its Italian identity."
Key members of the LELIT Group management team, including the founders, have agreed to join the Breville Group as part of the deal.
LELIT CEO Emanuele Epis says he looks forward to leveraging Breville’s global platforms, capabilities and infrastructure to further strengthen LELIT's success on a global scale.
"Breville Group is the ideal strategic partner to support LELIT in its next stage of growth, at the same time enabling us to remain faithful to our Italian heritage and design," Epis says.
The cash component will be paid by a mix of cash and debt.
As at the end of 2021 Breville had $31.7 million in net cash following two years on a caffeine kick in which profits rose 35 per cent from FY19 to FY21 to reach $91 million, while sales percolated 56 per cent to around $1.19 billion.
BRG shares were down 3.37 per cent this morning at $26.07 each - below the $27.64 per share basis for the scrip component of the acquisition.
The share price has been volatile since the start of last year hitting highs above $33 in August, but has since been on a slow dip to the current level, sitting 7 per cent up on pre-COVID trading.
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