Fedrigoni, an Italian manufacturer of speciality papers, labels and self-adhesive materials, controlled by Bain Capital and BC Partners, is in discussions with several acquisition targets, Chief Executive Officer Marco Nespolo told this news service.

The company is eyeing a series of deals from a “rich” pipeline of smaller acquisition targets to expand its offerings and geographic presence, he said.

Nespolo anticipates closing the first couple of transactions in the first half of the year, with four deals already in progress.

The company is keen to expand its RFID (radio-frequency identification) capabilities, a segment it entered in 2022 through the acquisition of Tageos.

It has grown in the segment by 30%-45% through increasing its production capability and the opening of plants in China and the United States alongside an existing Montpellier site.

Last week Fedrigoni announced a minority investment in SharpEnd, a London-based IoT solutions and consulting firm founded in 2015 by CEO Cameron Worth.

A minority stake allows Fedrigoni to gain exposure in the sector —“skin in the game,” the CEO said— which can be increased overtime as technology is developed and client partnerships established.

The deal will allow collaboration on IoT software solutions aimed especially at luxury and consumer goods clients.  

Geographic expansion through M&A is the second priority, especially in Europe and North America, where Nespolo acknowledges there is room for significant growth. Asian targets, meanwhile, will only be explored over the longer term.

Management will also explore additional extensions of its offering for niche adhesive applications. An example is the acquisition of Turkey’s Unifol, which focused on adhesive material for machines and advertising products.

Acquisition targets typically report EBITDA of up to EUR 30m to EUR 40m; its previous acquisitions were historically smaller in the EUR 10m to EUR 30m EBITDA range.

The cash resources of the company allow it to explore transformational buys too, he added.

An in-house team drives the search for targets from scouting and analysis to deal sourcing and integration. A network of external banks and M&A boutiques then assist with the transactional aspects of deals and offer suggestions that Nespolo is open to hear about.

Fedrigoni recently announced a EUR 665m bond which will provide considerable liquidity and funding for M&A deals, he said.

The company will look to refinance another bond between the end of this year and the beginning of the next one.

The bond consists of a EUR 365m 11% senior secured 2027s indicated at 109-mid yielding 5.9% to worst on IHS Markit. The fixed rate notes are first callable at 105.5 from 25 October 2024 before the redemption price steps-down to 102.75 from 25 October 2025 and 100 from 25 October 2026.

IPO still possible 

A listing is still an option for the future, although the joint ownership signed by the two PE backers in 2022 has shifted this time frame further.

Eventually, the funds will seek an exit, he said, with an IPO among the possibilities. By then the company will have reached a critical mass that might justify accessing the public markets.

Bain Capital and BC Partners declined to comment.