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Illycaffe to sell minority stake to Rhone Capital

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Premium coffee maker Illycaffe is to enter a strategic partnership with Rhone Capital in which it will sell a minority stake to the U.S. private equity firm, Andrea Illy, chairman of the family-owned Italian company, told Reuters.

The transaction will mark the opening up of Illycaffe’s capital to a non-family investor for the first time since its foundation in 1933.

“We have chosen Rhone Capital as a minority shareholder to accelerate our international expansion with a particular focus on the United States, the world’s biggest market for coffee,” Illy said.

The deal, on which Goldman Sachs acted as Illycaffe’s adviser, was also part of a process to prepare the company for the transition to the family’s new generation, he added.

Illycaffe, which produces a blend made of nine varieties of arabica beans, was established by his grandfather, Francesco, and is 100% owned by the family’s Illy Group holding company.

The chairman said an alternative offer under which private equity Peninsula would buy 23% of Illy Group from one of his brothers had been rejected by the rest of the family.

Italian daily Il Sole 24 Ore reported on Saturday that Rhone would buy 20% of Illycaffe for more than 200 million euros ($237.06 million).

“Financial details are under discussion and will be unveiled at the beginning of 2021,” said Illy, who did not confirm the size of the stake being sold.

He said the deal with Rhone, which was approved unanimously by the Illy Group’s board, would speed up the coffee maker’s future growth with a new focus to home consumption.

“We have rapidly adapted to the health crisis with a big investment in the digital transformation,” he said, adding coffee pods and products to be sold in supermarkets were now the priority.

Illycaffe reported a 7,7% rise in sales in 2019 to 520 million euros, with a core profit of 77 million euros.

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