ITALY: Speculation Surrounds Esselunga Following Death of Owner

The future of Esselunga, Italy’s fourth-largest supermarket chain, has been called into question following the death of its co-founder and owner, Bernardo Caprotti (90) on Friday.

The privately-held chain is also Italy’s most profitable grocer, and Caprotti has firmly rejected offers to sell the business for decades.  However, in recent months, he had reportedly begun talks with private equity firms for a potential sale, which reports estimated could be worth up to €6bn.

A Reuters report cited unnamed sources as saying Caprotti had been in talks with CVC Capital Partners, Blackstone and BC Partners.  The report said his terms included maintaining the Esselunga brand and the business for up to 10 years.

Esselunga reported sales of €7.3bn last year.

NAM Implications:
  • Where at: The Italian retailing sector and the legal system will be a somewhat quieter place following the death of Bernardo Caprotti
  • Where headed: Apart from the question of management succession following a 51 year ‘solo run’ in charge of Esselunga, it looks like a conversion to Private Equity, probably resulting in asset sell-off, cost-cutting and exit via flotation or takeover by a competing retailer in five years
  • Effect on you: In the meantime, a period of uncertainty…
  • Action: Suppliers will go for short-term transactional relationships until the uncertainties are resolved, whilst harmonising prices and terms in order to avoid possible issues in the event of takeover by a competitor over the next few years…