6 October 2024
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Global Industry

Europastry S.A.: goes public on the Spanish stock exchange

Barcelona / ES. (ep) Spanish Europastry S.A., a specialist in premium quality frozen bakery products and a top-five player in the global frozen bakery market, with over EUR 1.3 billion of net turnover in 2023 and EUR 714 million of net turnover in the six months ended 30 June 2024, announced on September 26 the approval and publication by the Spanish Securities Market Commission (the Comision Nacional del Mercado de Valores or «CNMV») of its prospectus (the «Prospectus») and the start of the book-building process, in the context of the initial public offering (the «Offering») of its ordinary shares (the «Shares») to qualified investors. The Company intends to apply for admission of its Shares to listing (the «Admission») on the Barcelona, Madrid, Bilbao and Valencia stock exchanges (collectively, the «Spanish Stock Exchanges») for trading through the Automated Quotation System (Mercado Continuo). The Company also announces that the non-binding indicative offering price range at which the Shares are being offered in the Offering is between EUR 15.85 and EUR 18.75 per Offer Share (the «Offering Price Range»).

The Offering is made by the Company and by its shareholders, Gallés Office S.L., Exponent S.a.r.l. and Indinura S.L. (together, the «Selling Shareholders»), to qualified investors inside and outside of Spain.

Key Offering Highlights

  • The total Offering size is up to EUR 555.4 million including the Over-allotment Option as defined below.
  • The non-binding indicative Offering Price Range at which the Offer Shares are being offered in the Offering is between EUR 15.85 and EUR 18.75 per Offer Share. The final price of the Offer Shares (the «Offering Price») will be determined by the Company and the Selling Shareholders, after consultation with the Joint Global Coordinators, upon completion of the book-building period (expected to finalise on or about 08 October 2024) and will be announced through a communication of inside information (comunicacion de informacion privilegiada).
  • In the context of the Offering, the Company has entered into an investment commitment agreement with Criteria Caixa, S.A.U. pursuant to which, subject to the fulfilment of certain conditions, Criteria Caixa, S.A.U. has irrevocably committed to purchase or subscribe for in the Offering, at the Offering Price, Offer Shares representing 5.0 percent of the Shares outstanding immediately following the Offering (excluding any Shares which may be issued as a result of the exercise of the Over-allotment Option). Criteria Caixa, S.A.U.’s irrevocable investment commitment is valid across the Offering Price Range.
  • The Offering includes a primary offering by the Company of between 11,200,000 and 13,249,211 new Shares (the «New Offer Shares»), which is the number of New Offer Shares required, based on the Offering Price Range, to provide the Company with gross proceeds in an amount of approximately EUR 210 million (excluding the Over-allotment Option as defined below), expected to help reduce the Company’s indebtedness and to enable the Company to capture potential investments for inorganic growth opportunities, such as mergers and acquisitions, that the Company may come across in the short or medium term.
  • The Offering also includes a secondary offering by the Selling Shareholders of 15,727,800 existing Shares (the «Secondary Offer Shares», and together with the New Offer Shares, the «Initial Offer Shares»), with the Gallés family (through Gallés Office S.L.) remaining as a controlling shareholder post Offering. In particular, the number of Secondary Offer Shares consists of (i) 14,386,800 Shares owned by Exponent S.a.r.l. (i.e., all Shares owned by such Selling Shareholder), (ii) 1,041,000 Shares owned by Indinura S.L. (i.e., 50 percent of the Shares owned by such Selling Shareholder) and (iii) 300,000 Shares owned by Gallés Office S.L. (i.e., 0.6 percent of the Shares owned by such Selling Shareholder).
  • Gallés Office S.L. and the Company will grant a joint option (the «Over-allotment Option») to the Joint Global Coordinators (on behalf of the Underwriters, as defined below), exercisable, in whole or in part, by J.P. Morgan SE or any of its agents, acting as stabilizing manager on behalf of the Underwriters, and in consultation with the other Joint Global Coordinators, to purchase or subscribe for, at the Offering Price, additional Shares representing up to 10 percent of the Initial Offer Shares (the «Over-allotment Shares» and, together with the Initial Offer Shares, the «Offer Shares»), solely to cover over-allotments of Shares in the Offering, if any, and short positions resulting from stabilization transactions, if any. If the Over-allotment Option is exercised, it will be exercised (i) first with respect to the Over-allotment Shares offered by Gallés Office S.L., which will consist of the number of Over-allotment Shares that, at the Offering Price, would represent an amount of approximately EUR 10 million – representing between 2.0 percent and 2.2 percent of the Initial Offer Shares based on the Offering Price Range -, and (ii) subsequently, to the extent that the exercise of the Over-allotment Option has exhausted all of the Over-allotment Shares offered by Gallés Office S.L., with respect to the Over-allotment Shares offered by the Company, which will consist of up to the remaining Over-allotment Shares (which, at the Offering Price, would represent an amount of approximately between EUR 35.9 and EUR 40.5 million and between 7.8 percent and 8.0 percent of the Initial Offer Shares based on the Offering Price Range).
  • The Company and the Selling Shareholders will agree to certain lock-up arrangements with the Underwriters during a period from the date on which the underwriting agreement is signed to and including 180 calendar days from Admission.
  • Following the Offering, if the Offering Price is at the mid-point of the Offering Price Range (EUR 17.30 per Offer Share) and the Over-allotment Option is exercised in full, the Shares outstanding as of the date hereof will represent 82.9 percent of the share capital of the Company and will confer 82.9 percent of the total voting rights.
  • The book-building period commences tomorrow, 27 September 2024, and is expected to end on 8 October 2024.
  • The Shares are expected to be listed on the Spanish Stock Exchanges for trading through the AQS on or about 10 October 2024, under the ticker symbol «EPTY».

Key Offering Data

  • Listing: Spanish Stock Exchanges
  • Ticker: EPTY
  • ISIN: ES0105815007
  • Offering Price Range: Between EUR 15.85 and EUR 18.75 per Offer Share
  • Base Offering Size: Between EUR 459 million and EUR 505 million
  • Over-allotment Option: Between EUR 46 million and EUR 50 million
  • Maximum Offering Size (inclusive Over-allotment option): Between EUR 505 million and EUR 555 million

Expected Offering Timetable

  • Prospectus Approval and Publication: 26 September 2024
  • Commencement of Book-building: 27 September 2024
  • Finalization of Book-building: 08 October 2024
  • Setting and publication of the Offering: 08 October 2024
  • Price and the final size of the Offering:
  • Allocations to qualified investors: 09 October 2024
  • Admission, Start of Trading: 10 October 2024
  • Settlement Date: 11 October 2024

Joint Global Coordinators

J.P. Morgan SE, UBS Europe SE and ING Bank NV. are acting as Joint Global Coordinators for the Offering (the «Joint Global Coordinators»). Banco Santander, S.A., CaixaBank, S.A., Banco Bilbao Vizcaya Argentaria, S.A. (in cooperation with ODDO BHF S.C.A.) and Codperatieve Rabobank U.A. (in cooperation with Kepler Cheuvreux SA) together with the Joint Global Coordinators, are acting as Joint Bookrunners for the Offering (the «Joint Bookrunners»). Banca March, S.A. and JB Capital Markets Sociedad de Valores, S.A.U. are acting as Co-lead Managers for the Offering (the «Co-lead Managers»). The Co-lead Managers, together with the Joint Bookrunners, are acting as Underwriters for the Offering (the «Underwriters»). CaixaBank, S.A. is acting as Agent Bank for the Offering (the «Agent Bank»). Cuatrecasas, Goncalves Pereira S.L.P. and Davis Polk + Wardwell LLP are acting as legal counsel to the Company and J+A Garrigues S.L.P. and Linklaters S.L.P. are acting as the Underwriters’ legal counsel.

Further details of the proposed Offering are included in the Prospectus approved by, and registered with, the CNMV in connection with the Offering. The Prospectus has been approved by, and registered with, the CNMV as competent authority under Regulation (EU) 2017/1129 of the European Parliament and of the Council, of 14 June 2017, on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC, as amended (the «Prospectus Regulation»), Law 6/2023 on Securities Markets and Investment Services (Ley de los Mercados de Valores y de Ios Servicios de Inversidn) and the relevant implementing regulations in Spain, and includes the information required by Annexes 1 and 11 of Commission Delegated Regulation (EU) 2019/980, of 14 March 2019, supplementing the Prospectus Regulation as regards the format, content, scrutiny and approval of the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Commission Regulation (EC) No 809/2004.

In particular, the Prospectus includes full details on the Offering and its expected timetable, and has been published and made available at the Company’s website (www.europastry.com/global/en/ipo/), and at the CNMV’s website (www.cnmv.es). Any acquisition of Shares in the Company should be made solely on the basis of the Prospectus approved by, and registered with, the CNMV. The approval of the Prospectus by the CNMV does not constitute an evaluation of the merits of the Offering.

Europastry, A Specialist In Premium Quality Frozen Bakery Products

Europastry, founded in 1987 by Pere Gallés, is a family-owned leading global player in the frozen bakery market. Headquartered in Barcelona, it operates worldwide across more than 80 countries with 27 production centers. The Company is focused exclusively on bakery products, differentiating itself through innovation and an expanding international footprint.

  • A leading global pure player: Specialist and pioneer in quality frozen bakery products, the leading supplier of frozen bakery products in Spain, with a 27 percent market share in Spain, and among the top-five players in the global frozen bakery market segment, based on 2022 net turnover.
  • Present in the fastest-growing segment of the bakery market: The frozen bakery market is expected to grow at an circa 6.5 percent CAGR in terms of revenue between 2021-26E in the geographies in which Europastry primarily operates, according to industry sources. The market tailwinds are mainly driven by: a) favourable structural customer trends, such as the preference for natural quality products, as well as, the reduction of business complexity with less waste, less personnel and less required know-how, driving the substitution of fresh products for frozen products; and b) the frozen bakery market benefits from a higher exposure to foodservice and traditional bakery customer channels, which are expected to grow faster than retail customer channels. As a result, between 2021-26E, the frozen bread and pastry market segment’s share of the total bakery market is expected to continue growing, in terms of volume, in the geographies in which Europastry primarily operates, according to industry sources.
  • Wide and innovative premium product offering: Europastry’s strong focus on R+D and outstanding know-how, combining artisanal and traditional bakery processes with modern technology, has led to a wide product offering of over 4,900 stock-keeping units (SKUs) in quality frozen products across pastries (circa 57 percent of 2023 net turnover), breads (circa 41 percent) and other products (circa 2 percent).
  • Industry-leading innovation capabilities: Europastry’s strong capabilities in innovation and product customization allow it to quickly adapt to market trends, create solid entry barriers, increase client retention and switching costs. Europastry’s innovation process, which from the idea stage to industrial production typically takes circa 9 to 12 months, is done through six innovation centers («Cereal innovation centers»), which helped to launch more than 480 new products in 2023.
  • Diversified and long-standing customer base: Europastry serves a diversified B2B customer base which includes (1) retailers (circa 56 percent for the six months ended 30 June 2024 net turnover), (2) foodservice customers (circa 30 percent), (3) traditional bakery customers (circa 12 percent), and (4) other manufacturer customers (circa 2 percent). The business structure efficiently services this well-diversified customer base, with Europastry’s top 20 customers representing approximately 36 percent of net turnover for the six months ended 30 June 2024, across five continents, with a tailored offering that meets changing end-market preferences, both directly and through over 650 third-party distributors to over 89,000 customer points of sale. Well-invested industrial footprint: The Company’s leadership lies in its integrated production and supply model that includes 27 production centers with a total of 97 production lines across seven countries, over 2,600 production processes and, in 2023, more than 1,000 raw materials suppliers.
  • Fast-growing operations through organic and inorganic growth: The Company has invested significantly to grow organically through innovation and the development of new production centers and lines. Between 2014 and 2023, the Company has delivered an annual average of 8.5 percent organic growth, Growth has also been driven by targeted value-accretive acquisitions of smaller frozen bakery competitors in Europe, the United States and Mexico, helping to drive a 14.5 percent net turnover growth CAGR between 2014 and 2023.
  • Experienced management team with a clear strategy to deliver profitable growth: Europastry believes its experienced and multidisciplinary management team, supported by strong family values, has demonstrated its capability by creating and developing a company with leading market positions, a continuously evolving and innovative product portfolio, successful international operations, a strong track record of acquisitions and a solid financial performance.
  • Recent trading and outlook: For the six months ended 30 June 2024, the Company achieved net turnover of EUR 714 million and adjusted Ebitda of EUR 114 million. Europastry is targeting net turnover growth for 2024, in percentage terms, of low-to-mid teens (including the impact of the March 2024 acquisition of DeWi Back Holding GmbH, a German producer of frozen bakery products, and the August 2024 acquisition of De Groot Edelgebak B.V., a Dutch distributor of frozen breads and pastries and a leader in the foodservice channel) and will target high-single digit average organic growth for 2025 onwards. In the medium term, Europastry expects its adjusted Ebitda margin to slightly increase relative to 2023 levels, driven by product mix and operational leverage, diversification of distribution channels, the phase out of ramp-up costs from growth investments, the crystallization of synergies from recent acquisitions and improved profitability from the Company’s international (ex-Europe) segment. Since 30 June 2024, Europastry’s performance has remained in line with its target net turnover growth for 2024. During the months of July and August 2024, the Company achieved net turnover of circa EUR 273 million, representing a year-over-year increase of 15.7 percent compared to July and August 2023. Approximately 8.5 percentage points of this growth was organic.

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