Creating Value through International Build-Ups
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Creating Value through International Build-Ups. Lessons to be shared. Milan, 9 November 2001. Franco Riccardi, Chairman and Partner, UBS Capital SpA - Milan. Creating Value through International Build-Ups. International Mergers for Growth. Global Garden Products. November 2001

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Franco Riccardi, Chairman and Partner, UBS Capital SpA - Milan

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Creating Value through International Build-Ups

Lessons to be shared

Milan, 9 November 2001

Franco Riccardi, Chairman and Partner, UBS Capital SpA - Milan


Creating Valuethrough International Build-Ups

International Mergers for Growth


Global Garden Products

November 2001

Franco Riccardi, UBS Capital SpA


  • Silvia Barrecchia (U):

  • Professional and non professional

  • Consumers’ price

The European Market of Garden Equipment2000 Sales by Product Group


The European Market of Garden EquipmentFeatures

  • Mature Industry

    • No revolutionary technological change

  • Trends in Distribution

    Expansion of modern distribution :

    • creates price pressures

    • demands wider and deeper product range

    • requires capability of PanEuropean commercial relationship

  • Stable Demand

    • Flat markets

    • Profit growth derives from cost control

  • Economy of Scale

    • Cost Structure is a function of Production volumes because of savings in

      Purchasing

      R& D

      Manufacturing Processes


CONSOLIDATION

FRAGMENTED INDUSTRY

The European Market of Garden EquipmentTrends


Global Garden Products

  • Investment concept: “buy and build” consolidation of the European garden equipment industry

  • Investment Date:Four acquisitions from December 1999to November 2000

  • Four acquisitions created Europe’s leading garden equipment company

    • Stiga (December 1999)

    • Castelgarden (October 2000)

    • Alpina (October 2000)

    • Mountfield (November 2000)


Global Garden Products

  • Stiga was a good initial building block

    • Is Nordic European leader in lawnmowers

    • is focused on specialized distribution

    • well-known brand in home market

  • Castelgarden was the #1 acquisition target identified

    • is Continental European leader in lawnmowers

    • is European low cost producer

    • focuses mainly on private label and OEM customers

    • is focused on mass market distribution

  • Stiga and Castelgarden complement each other very well

  • Alpina gives scopes for cross selling in distribution channels

    • is European leader in chainsaws, brush cutters, hedge trimmers

    • is both a strong brand and a Private Label manufacturer

    • covers all distribution channels

  • Mountfield fills a gap

    • it gives better access to the key UK market with a well-known local brand


Transaction Overview - Group Formation

  • GGP is the result of UBS Capital having acquired four separate companies with the goal of consolidating the European garden equipment sector

    DateCompanySales

    (MEUR)

    December 1999Stiga (Sweden)150

    October 2000Castelgarden (Italy)240

    October 2000Alpina (Italy)45

    November 2000Mountfield (UK) 20

    455


Global Garden ProductsThe fit


Global Garden ProductsBusiness Plan

  • Focus on organic growth in key high margin product segments

    • ride-on mowers

    • petrol walk-behind mowers

  • Integration of companies to create synergies

    • purchasing

    • production

    • sales

  • Development of new products

    • entry point rider to compete with US imports

    • specific walk-behind models

  • Remain leading supplier to

    • specialist dealers (2/3 of sales)

    • mass market (fastest growth)

  • Products to be sold as:

    • own brand (Stiga, Mountfield, Alpina)

    • OEM brands sold to specialist dealers (e.g. Honda, John Deere)

    • Private label


Competitors


Global Garden ProductsFinancial Performance (August year end)


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