Syntegra set to reap 19x return from Moleskine

The Europe-focused buyout firm has agreed to sell its remaining 35% stake in Moleskine, completing its final exit from the luxury notebook maker.

Ten years after acquiring Moleskine, Syntegra Capital is set to make a return of as much as 19x from the sale of its 35 percent stake in the luxury notebook maker.

Moleskine is best known for its black leather-bound notebooks with rounded corners, made in the same style as the ones used by artists and writers like Bruce Chatwin, Ernest Hemingway, and Pablo Picasso. The company began as Modo&Modo, a small Italian publisher that in 1997 revived the Moleskine brand.

In a statement released after markets closed on September 22, Syntegra, a mid-market buyout firm focused on continental Europe, said it had agreed to sell its stake in Milan-listed Moleskine for €2.40 a share, valuing the company's equity at €506 million.

The buyer is D'leteren, a Brussels-based, family-owned group that owns D'leteren Auto, Belgium's biggest car distribution company by market share. D'leteren said in a statement that in the fourth quarter of this year, it will launch an unconditional mandatory takeover offer for the remaining shares in Moleskine with no minimum threshold of ownership.

D'leteren's offer is €2.40 a share, the same price it paid Syntegra and another reference shareholder, venture capital firm Index Ventures, and represents a 12 percent premium over Moleskine's closing price on September 22. The Belgian group bought a 6 percent stake in Moleskine from Index Ventures, taking its total holdings to 41 percent. The intention is to delist the company from the Milan stock exchange, D'leteren said.

Syntegra is understood to have generated an internal rate of return of about 59 percent from its investment in Moleskine.

Moleskine was sold to London-based Syntegra in October 2006. Syntegra paid a hefty 12x 2006 EBITDA for its 68 percent stake back then, and after making an initial investment of €17 million in equity, Syntegra went on to purchase a further 12 percent in the business in 2007.

“We saw enormous potential,” Marco Ariello, managing partner of Syntegra and chairman of Moleskine, tells Private Equity International.

“The brand positioning was very strong, with a unique heritage and a vibrant community of Moleskine fans. We identified Arrigo Berni as chief executive, and supported Arrigo and his team in strengthening brand awareness and visibility, moving [Moleskine] from an iconic product – the legendary notebook – into a lifestyle brand.”

The long-term strategy for Moleskine included enlarging its distribution footprint, broadening its product offering, and expanding into e-commerce and direct retail, Ariello said.

Indeed, Moleskine now sells writing instruments, reading accessories, and bags as well as notebooks, and recently opened Moleskine Café, an all-in-one coffee shop, art gallery, store and library in Milan.

Syntegra completed a series of partial exits from Moleskine over the course of its ten-year ownership. These include two dividend recapitalisations, in 2007 and 2010; in that same year, the firm sold a 15 percent stake to Index Ventures, which has offices in Europe and San Francisco.

In March 2013, Syntegra offloaded another 47 percent in an initial public offering that priced Moleskine stock at €2.30 a share, raising €245 million, and valuing the company at €490 million, Bloomberg reported at the time. A block sale of 7 percent followed in 2015.

Now that the remaining 35 percent has been sold to D'leteren, Syntegra has fully exited the company. It is leaving the business at a time when Moleskine is still growing: EBITDA has risen from around €5 million in 2005 to around €42 million in 2015, and in the past ten years, the company has transformed itself from a staff of less than 20 to about 450 employees.

Moleskine was an investment from Syntegra's Fund III, which closed on €245 million in June 2005. PEI's database shows no new Syntegra funds since then, and it is understood that the firm is not fundraising at this time. Syntegra declined to comment on its fundraising plans.

Syntegra's website lists two portfolio companies as unrealised, both investments from Fund III. These are Market Maker, a French supplier of advertising and promotional materials, acquired in November 2006, and Gevers, a Belgian-French intellectual property company, acquired in May 2007.

Brussels-based D'leteren, the car distribution group buying Moleskine, imports luxury cars like Audi and Porsche as well as more affordable brands like Skoda and Volkswagen, and also owns a vehicle glass repair and replacement business. In a statement, D'Ieteren chief executive Axel Miller called Moleskine a “great fit” for the Belgian group.

“It has a leadership position, an outstanding management team, a solid track record, scalability, growth potential and a fit with our culture,” Miller said.

The fit D'leteren sees between the luxury cars it imports and the premium notebooks Moleskine makes has to do with the positioning of both businesses as aspirational brands.

“An aspirational lifestyle brand has been built and this is something we can bring to the next level”, Reuters quoted Miller as saying of Moleskine in a conference call on September 22.

The closing of the Moleskine deal is subject to clearance from the German antitrust authority.

Moleskine shares closed 15.9 percent higher at €2.48 on September 23.