The merger with Centrale del Latte di Firenze, Pistoia e Livorno (CLF) is set to complete at the end of September: the businesses are highly complementary and the combination will add c 75% to sales, more than double EBITDA, and significantly enhance earnings. The 2016 outlook was subdued and the market in Northern Italy remains tough given the difficult consumer backdrop. We calculate a DCF-based fair value of €3.00 for the combined entity, which offers 8% upside from current levels.
