Unlocking the €5 Billion Opportunity: Why Newlat-Princes is Europe’s Next Food Giant

In a sector primed for consolidation, the merger of Newlat Food and Princes Limited marks a seismic shift in European food markets. By combining Newlat’s Italian dairy expertise with Princes’ UK/EU distribution prowess, this €700 million deal creates a juggernaut poised to dominate branded food categories—from pasta sauces to canned tuna—with a clear path to €5 billion in annual revenue by 2030. For investors, this is a rare chance to capitalize on a structurally undervalued stock riding secular tailwinds. Here’s why you should act now.

The Power of Synergies: €36M in Savings, €5B in Ambition

The merger’s backbone lies in its operational and commercial synergies, projected to deliver €36 million in annual cost savings by 2030. These savings stem from:
- Supply Chain Optimization: Merging Newlat’s Italian dairy operations with Princes’ UK-based production of sauces, oils, and canned goods will eliminate redundancies.
- Cross-Border Distribution: Princes’ 6,300-strong workforce and pan-European supply network amplify Newlat’s reach, while Newlat’s Milan-exchange-listed structure provides capital flexibility.
- Brand Portfolio Expansion: The combined entity will control over 400 products, including Newlat’s dairy staples (e.g., Centrale del Latte) and Princes’ iconic UK brands (Branston Pickle, Olivio).

Crucially, these synergies are already in motion. Newlat’s standalone EBITDA of €68.1 million (2023) and Princes’ turnaround to £100.5 million adjusted EBITDA (2024) form a solid foundation. The target of €317 million EBITDA by 2030 (9.5% margin) is achievable through margin expansion, with further upside if synergies outperform expectations.

Market Dominance: A Pan-European Food Titan

The merged entity, New Princes Group, commands a €2.8 billion revenue base (2023/24 combined results), with a clear roadmap to double this by 2030. Key growth levers include:
1. Category Leadership:
- Dairy & Pasta: Newlat’s dominance in Italy (via Centrale del Latte) and emerging markets (via EM Foods in the Middle East) pairs with Princes’ UK stronghold in sauces and oils.
- Plant-Based & Sustainable Products: Princes’ Flora Buttery and Olivio brands align with Newlat’s ESG goals, tapping into Europe’s €35 billion clean-label market.
2. Geographic Expansion:
- Newlat’s foothold in Italy and the Middle East complements Princes’ UK and EU operations, enabling cross-border distribution and market penetration.
- Princes’ recent Capri-Sun juice pouch contract (250 million units annually) signals scalability in high-margin snacks.

Despite these catalysts, the stock has only risen 7% post-announcement—a stark contrast to the €2.2 billion valuation uplift implied by the merger. This disconnect presents a buying opportunity.

Undervalued Stock & Low-Risk Execution

The market has yet to fully price in New Princes’ potential. Key valuation metrics:
- Stock Performance: Shares closed at €6.41 post-2023 results, up just 0.2% despite strong earnings. The post-acquisition bump to €6.89 (7%) lags the strategic upside.
- Valuation Multiples: At current prices, the combined entity trades at 7.2x 2024E EBITDA, below peers like Nestlé (8.5x) and Unilever (10.2x).
- Regulatory Certainty: The deal cleared EU antitrust hurdles swiftly, reducing execution risk.

The €50 million equity injection from Mitsubishi Corp. (for a 15% stake) also signals confidence in the business’s stability.

Why Invest Now?

1. Sector Tailwinds: Europe’s branded food market is growing at 3-4% annually, driven by premiumization and ESG demand. New Princes’ portfolio perfectly aligns with this trend.
2. Low Valuation Risk: With €36 million in annual synergies and a €5B revenue target, the stock’s current valuation leaves ample room for upside.
3. Dividend Potential: Newlat’s 2023 net profit doubled to €15.5 million, while Princes returned to profitability in 2024. A combined dividend yield could attract income-focused investors.

Conclusion: A Rare, High-Conviction Opportunity

The Newlat-Princes merger is more than a consolidation—it’s a blueprint for European food dominance. With €5B in revenue, €317M in EBITDA, and a €700M undervalued stock, this is a once-in-a-decade chance to back a growth story with tangible execution.

Investors should act swiftly: as synergies materialize and the stock closes its valuation gap, the upside could be 30-50% in 12-18 months. In a sector where scale and brand power reign, New Princes Group is already writing the next chapter.

Time to position for Europe’s next food giant.