Portobello SpA — Creating an omnichannel presence
Portobello (MI: POR)
EUR119m
Portobello's proposed acquisition of ePrice Operations as a joint venture with Riba Mundo Tecnologia will lead to Portobello becoming an omnichannel operator from its current store-based focus and enable it to grow ePrice's core volume (consumer electronics and household appliances) while adding complementary products from Portobello's range. The enhanced volume, purchasing power of Portobello and Riba and cost synergies should lead to enhanced revenue growth and prospects for ePrice's activities. Our financial estimates are unchanged ahead of the expected completion date for the transaction (within 90 days) and Portobello's H122 results, which are expected to be published on 19 September 2022.
Director, Consumer
Portobello SpA
Creating an omnichannel presence
Proposed acquisition
€86m
Net debt (€m) at 31 December 2021
Euronext STAR Milan
Portobello aims to build a national Italian retail presence (from 27 current stores) via a rapid roll-out of own-stores and franchises. It uses a combination of barter (own and third-party media) and cash purchases to source branded products from its suppliers.
Sara Welford
Portobello SpA is a research client of Edison Investment Research Limited
Revenue (€m)
(€m)
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
Portobello has announced the proposed acquisition of ePrice, whose main asset is one of Italy's leading online shops focused on consumer electronics and large household appliances. Management believes ePrice has high brand equity given its 22-year history and 500k customer base in 2020 (which made 637k orders with average receipt of €287).
The acquisition will be a 50:50 joint venture with Riba, a Spanish company that is a European leader (serving 17 countries) in the purchase and resale of electronic products in the B2B segment. Riba, which had net turnover of c €174m in 2021, brings significant buying scale to the joint venture, which is key in the trading of consumer electronics. Riba's presence will also allow Portobello to develop a competitive B2B offer for SMEs.
ePrice was loss-making in 2020 (EBITDA loss of €14.1m), therefore the potential for the joint venture to significantly increase volume at a lower cost (Riba and Portobello's scale) and improved efficiency (logistics and marketing efficiencies) should provide the base for future profitability.
The acquisition enterprise value of €6m (including debt of €900k) is a very low 0.06x 2020 sales (€101.4m), partly reflecting the timing of the deal (ie the widespread recent derating of online retailers amid the general stock market weakness) and ePrice's recent corporate history. ePrice was previously owned by a holding company (originally named Banzai) in the internet sector, which listed on the Star segment of the Italian Stock Exchange in 2015. Banzai subsequently changed its name to ePrice following the sale of other assets, and there was a pre-bankruptcy filing in 2021.
This report has been commissioned by Portobello SpA and prepared and issued by Edison, in consideration of a fee payable by Portobello SpA. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.
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