Illycaffe Kicks Off Stake Sale to Fuel U.S. Expansion

(Bloomberg) -- Illycaffe SpA, one of Italy’s largest coffee roasters, has kicked off the sale of a minority stake to support its expansion in the U.S. market, people familiar with the matter said.

The company, known for high-end espresso sold in silver and red cans, has sent preliminary marketing materials to potential investors, according to the people. Illycaffe could offer about a 20% stake that may value the firm at more than 1 billion euros ($1.1 billion), the people said, asking not to be identified because the information is private.

Illy hired Goldman Sachs Group Inc. in October to find a partner to expand its business in the U.S. market, Chairman Andrea Illy said in an emailed statement on Tuesday.

One of the most prized brands in coffee, Illy is still run by the family that founded the roaster in the northeastern city of Trieste in the 1930s. The company had sales of 483 million euros in 2018, and operates in more than 140 countries. It has been expanding its network of cafes on shopping streets, in museums and in airports.

That pushes Illy into a market dominated in the U.S. by Starbucks Corp. The Italian brand has been trying to appeal to American consumers by offering recipes for seasonal drinks like chocolate mint lattes on its website.

A deal could include a mix of new stock as well as existing shares sold by the family-owned holding company that controls Illycaffe, one of the people said. No final decisions have been made, and there’s no certainty the deliberations will lead to a transaction, the people said.

A stake sale would give companies a rare opportunity to invest in one of the most coveted brands in coffee and one of the biggest independent roasters left, as the owners are said to have so far rebuffed takeover approaches by JAB Holding Co. and Nestle SA. Illycaffe, founded in 1933 by Francesco Illy, is led by the third generation of the same family.

The firm last year teamed up with Jacobs Douwe Egberts, a coffee roaster controlled by JAB, to produce aluminum capsules compatible with Nespresso machines.

The $87.5 billion coffee industry has seen a flurry of deals, with JAB splurging more than $30 billion on labels like Keurig Green Mountain and Peet’s, and Nestle securing the right to market Starbucks products. Chairman Illy told reporters at a press conference last year that “everyone would want” to buy Illy, but that the company is against a takeover, citing its business model as an independent company.

--With assistance from Corinne Gretler and Tommaso Ebhardt.

To contact the reporters on this story: Vinicy Chan in Hong Kong at vchan91@bloomberg.net;Dinesh Nair in London at dnair5@bloomberg.net;Daniele Lepido in Milan at dlepido1@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, ;Ben Scent at bscent@bloomberg.net, Aaron Kirchfeld

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