Italian coffee producer Luigi Lavazza S.p.A.’s decision to stay independent remains firm, with the company revealing that it had declined bid offers from the coffee industry’s major players, including Germany’s JAB Holding Co. as well as Swiss food and drink group Nestlé SA.
Lavazza Vice President Giuseppe Lavazza stated that the group turned down bid propositions from JAB about two or three years ago, adding that Nestlé had earlier approached them as well.
The Turin-based manufacturer has been an important target for JAB, since acquisitions act as key foundations for the German conglomerate’s business.
Co-vice President Marco Lavazza said being courted is something that pleases them, but they were absolutely sure about remaining independent.
JAB and Nestle did not comment on the subject.
Lavazza is Strong Enough to Compete against Rivals
Given that Lavazza is a mid-tier coffee maker and distributor, some industry analysts were concerned over the possibility that it might fall behind or get taken over by bigger contenders.
Giuseppe Lavazza believed that they can lessen the risk of being driven into a corner by raising their sales to about €2.2 billion ($2.71 billion) by 2020, which they are close to achieving, adding that the company was large enough to compete against rivals.
Lavazza reported revenue of €2 billion ($2.5 billion) in 2017. The coffee firm has acquired five coffee companies in Europe and Canada over the past three years, which has helped bolster its earnings, but the group said in February that it is planning to focus on organic growth.
Lavazza last year bought an 80 percent stake in Canadian organic coffee maker Kicking Horse Coffee Co. Ltd., as well as Italian coffee pods distributor Nims S.p.A.
JAB and Nestlé on the other hand, do not present directly similar data on their coffee-related revenue. The food group’s sales for soluble coffee and coffee systems came in at CHF9.28 billion ($9.65 billion) last year.
Nestlé owns coffee and espresso machine expert Nespresso, while JAB has Jacobs Douwe Egberts.
Nestlé, JAB, and coffeehouse chain Starbucks Corp. are currently the three biggest companies in the coffee industry worldwide, followed by a number of mid-tier firms, including Lavazza.
Giuseppe Lavazza said the group, which ended 2017 with €460 million ($567.48 million) in cash, could finance more acquisitions using internal funds and potential bond issuance. He added that he expects recent acquisition spree in the sector to slow down in the future.
The two vice presidents also restated that an initial public offering (IPO) was not part of their plans at the moment.
Some had previously speculated that the coffee maker would consider relying on the stock market to step up its expansion, seeing that it stands behind global sector leaders Nestlé, JAB, and Starbucks.
Marco Lavazza already said in February that they have to consolidate what they have done last year, before thinking about new acquisitions. The co-vice president also saw being not listed at that time as an advantage for them, although he did not dismissed the idea completely.
He added that Lavazza was strong and had enough liquidity to continue operating on its own.
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