An anticipated disposal Ebro has announced the disposal of its Panzani dry pasta, couscous, sauces and semolina business to CVC, pending the approval of French unions and antitrust authorities. The business sold (not all Panzani as Ebro retains fresh pasta and rice) had sales of EUR470m in 2020 and generated an EBITDA of EUR57m (16% of total in both cases) in the peak year of 2020. The price was below previous transactions CVC will pay EUR550m, with some final adjustments on working capital and debt, which implies an EV/EBITDA of 9.6x, very much in line with the 10x Ebro is currently trading at, but below the EUR600m that the press and some investors had mooted (the potential for the transaction had been aired by the press in the last 12 months). Not entirely positive in our view We think that despite it being a business with low growth and high competition, there is not much value creation on the deal. As mentioned above, the price does not look high, the margin of the business was in line with the group''s margin and in our opinion, Ebro having a smaller size could reduce its negotiation capacity with food retailers. Net debt reduction and special dividend but lower than with previous disposals With the proceeds, Ebro will reduce debt and give a special dividend, although it will be smaller than the EUR300m following the North American disposal. The deal is expected to close by year end. We will update our model for the disposal and capital return with the H1 results. We maintain a negative view We believe the disposal of Panzani is not a positive catalyst for the shares, while results coming next Wednesday will be negatively impacted by a tough comparison, headwinds on raw materials and higher promotions. We maintain our Underperform rating on the name.