Certares group in exclusive talks for ITA Airways purchase; RedBird scores AC Milan deal

RedBird will invest in all the key areas that will advance AC Milan's sporting and commercial interests.

Good morning Eurohubsters, Craig McGlashan here with the Dealflow.

Italy’s political future might be unclear, with the government – led by former European Central Bank president Mario Draghi – on its way out and far-right party the Brothers of Italy topping polls to win a snap general election on 25 September. But we at least have a bit of certainty when it comes to Italian private equity deals.

Barbarians at gate 12. PE Hub Europe’s resident Italophile David Wansboro reports that a Certares-led bid backed by Air France-KLM and Delta Air Lines has entered exclusive talks to buy a majority stake in Italian government-owned airline ITA Airways.

Negotiations began on Wednesday, although further details of the potential deal have not been made public by the Italian Treasury.

ITA Airways was born after the Italian government took ownership of struggling flag carrier Alitalia in March 2020, partly due to concerns that it would struggle to make it through the coronavirus pandemic. It was reorganised as Italia Trasporto Aereo in October 2020.

A decree by prime minister Draghi in May set the conditions for the airline to move back into private hands. But in early August – after Draghi had announced his resignation in July – the Brothers of Italy party asked for the sale to be frozen.

Regardless, the Italian government pushed ahead and entered exclusive talks with the Certares group, rather than the rival bidding group of Geneva-headquartered global shipping group MSC and Cologne-headquartered airline Lufthansa.

Certares is a private equity firm headquartered in New York and has offices in Milan and Luxembourg. ITA Airways is headquartered in Rome.

Nice finish. David has another Italian piece, this time on one of the country’s great passions – football.

RedBird Capital Partners has completed its €1.2 billion purchase of Italian football club AC Milan from Elliott Advisors. Yankee Global Enterprises (YGE), owner of the US baseball team the New York Yankees, has acquired a minority equity stake as part of the deal.

RedBird will invest in all the key areas that will advance the club’s sporting and commercial interests, the firm said. RedBird has added AC Milan to its portfolio of global sports and entertainment investments that include Fenway Sports Group, owners of Liverpool FC, the Boston Red Sox and the Pittsburgh Penguins, among others.

“Our vision for Milan is clear: we will support our talented players, coaches and staff to deliver success on the pitch and allow our fans to share in the extraordinary experiences of this historic club,” said Gerry Cardinale, RedBird founder and managing partner.

RedBird Capital is a private investment firm that focuses on building high-growth companies in partnership with entrepreneurs in sports, media, experiential consumer and financial services. The firm is headquartered in New York.

The seller, Elliott Advisors, is a New York-based investment management firm with assets under management of $56 billion.

Private equity firms – particularly from the US – are taking an ever-greater interest in European football. You can read my recent roundup of the trend here.

Early finish. While PE firms have been happily bouncing into football deals, we’ve been hearing a lot recently about how it’s getting trickier for private equity firms to exit companies.

So that made it a pleasant surprise when PE Hub Europe’s Nina Lindholm spoke to Triton Partners managing partner Claus von Hermann, who revealed that the financial numbers on one of its recent deals allowed it to exit a little earlier than planned.

In late July, Triton announced it had signed an agreement to sell Ewellix to Herzogenaurach, Germany-based Schaeffler AG.

Gothenburg-headquartered Ewellix is a manufacturer of actuation and linear motion products, used in the fields of medical, mobile machinery, assembly automation and robotics, and various general industrial applications.

During Triton’s 3.5-year ownership, via its Triton Fund V, Ewellix’s EBITDA grew by 78 percent, from €25 million to €45 million, according to sources familiar with the matter. The sources added that Ewellix is “expected to generate a return of around 4x gross money”.

That was a good result for Triton, according to von Hermann.

“At one point we thought we’re probably going to hold it slightly longer, because we have to first grow out of covid,” von Hermann told Nina. “But we actually saw the pandemic as an opportunity to accelerate our value creation plan. The management team did such a great job of repositioning this business that they captured a lot of growth in a lot of different pockets.

“We had done a lot of good work in a very short time period; we got a very attractive valuation for the business – that’s why we decided to sell.”

You can read the whole interview here.

Best of the rest. I have to run to a meeting this morning so, like Triton, I need to make an early exit.

But before I go, I’d suggest that you also check out our coverage of TDR-backed UK supermarket chain Asda buying over 100 convenience stores and petrol filling stations from rival The Co-op and Main Capital buying and combining PLATO and iqs into a new software group.

Have a great day and we’ll speak again on Friday.