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Canadian M&A Market Recap: Week Ended March 10

  • Posted By: Karen Fisman, John Turley-Ewart, Louis Goldberg, Yingxi Liao, Chris Angelatos, and Paris Aden

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Market Update

Fourty-eight Canadian M&A transactions were announced this past week. Year to date, M&A deal count is 13% higher than the comparable period in 2016. The Canadian dollar depreciated by 0.32 cents, ending the week at 74 cents. WTI Crude Oil fell sharply this week, closing under $50 per barrel, which is 8.6% lower than the previous week.

Average total leverage for new issue U.S. middle market loans ended the week at 4.7x EBITDA, while new issue clearing yields were 0.61% lower than last year’s levels. According to a Thomson Reuters LPC survey, intensified competition in 2016 resulted in more than half of banks falling below their stated lending goals. The outlook this year, however, is that two-thirds of banks will exceed lending goals. 

Valitas Insights: Disruptive Partnerships and “Sandbox” Regulation:  What’s Ahead for Canadian Fintech?

At JP Morgan Chase, software is expediting the review of commercial loan documents, a process previously completed by lawyers and loan officers, which consumed about 360,000 hours per year.  Reporting on this milestone development, Bloomberg news noted that the software “reviews documents in seconds, is less error-prone and never asks for vacation.”

And this is just the start.

Faced with the threat of losing customers to startups, JP Morgan is determined to stay ahead (or at least abreast) of the innovation curve.  The firm, which has a technology budget that is double the industry average, has set up big data, robotics and cloud infrastructure hubs to identify new sources of revenue, while reducing risks and expenses.

In a recent Globe and Mail Article, Michael King considered how fintech might disrupt industry incumbents.  He notes that banks might use fintech to “disrupt” their own costs, in the manner that JP Morgan is doing, but points to the current consensus that banks and fintech startups are likely to collaborate, to mutual benefit. 

We’ve seen this as recently as this week, with the announcement that JP Morgan Chase will use Canadian fintech startup Dream Payments’ technology to roll out a mobile-payments service across Canada.   Other bank/startup partnerships have formed as well over the past year.  CIBC has partnered with Borrowell, a consumer lender, and Thinking Capital, a small business lender, for online loans; Scotiabank and TD Bank have similar relationships with, respectively, Kabbage Inc. and Movencorp Inc.. 

Regulators are paving the way for fintech startups to operate more seamlessly across Canada, which should make these partnerships more appealing to incumbent banks.  In February, Canadian regulators announced the “Regulatory Sandbox Initiative”, established to streamline the regulatory approval process for fintech startups across Canada. 

While fintech investment declined last year in the U.S. and the U.K., in Canada, we are on the upswing.  PitchBook reports that venture capital financing in Canada was US$137.7 million in 2016, a 35% increase over 2015.  With a friendlier regulatory environment and the banks looking to fintech startups to collaborate, our view is that we’re just getting started.

 

Deal Summaries

Announced Deals

MYM Nutraceuticals to Acquire HempMeds PX

MYM Nutraceuticals Inc. (DB:0MY), a Canadian company that focuses on the production and distribution of medical marijuana in Canada, has agreed to acquire HempMeds PX, LLC, an American company that produces and supplies cannabidiol (CBD) oil and CBD hemp oil products. Total transaction value is estimated to be $914 thousand.

Canadian Natural Resources; Shell Canada to Acquire Marathon Oil Canada

Canadian Natural Resources Limited (TSX:CNQ), a Canadian exploration, development, producer, and marketer of crude oil, natural gas and natural gas liquids, along with Shell Canada Limited, a diversified oil exploration, drilling, and marketing business, has acquired Marathon Oil Canada, a former subsidiary of Marathon Oil Corporation (NYSE: MRO). Total transaction value is estimated to be 3.38 billion.

CVR Medical to Acquire CVR Global

CVR Medical Corp. (TSXV:CVM), a Canadian company that engages in the development and advancement of technology at work within the healthcare sector, has agreed to acquire CVR Global Inc., a American company that develops medical devices for detection of carotid arterial blockage. Total transaction value is estimated to be $1.7 million.

AcuityAds Holdings to Acquire Visible Measures

AcuityAds Holdings Inc. (TSXV:AT), a Canadian company that through its subsidiary, AcuityAds, provides digital media solutions, has agreed to acquire Visible Measures Corporation, a Mohr Davidow Ventures, General Catalyst Partners, Commonfund Capital, Northgate Capital Group, DAG Ventures, Advance Vixeid Capital Management, and Wildcat Venture Partners backed American company that provides content advertising technology. Total transaction value is estimated to be $13.5 million.

SUEZ; Caisse de dépôt et placement du Québec to Acquire GE Osmonics

SUEZ SA (ENXTPA:SEV), a French company that provides water management, recycling and waste recovery, water treatment, and consulting services, and Caisse de dépôt et placement du Québec, a privately owned investment manager, have agreed to acquire GE Osmonics, Inc., a American company that designs, manufactures, and markets products used in the filtration, separation, and processing of fluids. Total transaction value is estimated to be $4.5 billion., implying a 12.5x EBITDA multiple and a 1.6x revenue multiple.

101303000 Saskatchewan to Acquire Pinnacle Industrial Services

101303000 Saskatchewan Ltd., a Canadian company that operates as a holding company, has agreed to acquire Pinnacle Industrial Services, a company that offers design, engineering, and project management services; maintenance and plant turnaround services; module construction, fabrication, and equipment manufacturing services; mechanical, ironworks, e/i, automation, machining, and millwright services; and overhead cranes, centrifuges, and bop’s services. Total transaction value is estimated to be $3.6 million.

Supreme Metals to Acquire Otter Minerals

Supreme Metals Corp. (CNSX:ABJ), a Canadian company that engages in mineral exploration activities in Canada, has agreed to acquire Otter Minerals Ltd., a Canadian company that owns and operates cobalt, nickel, and silver reserves. Total transaction value is estimated to be $985 thousand.

Endemol Shine Group to Acquire Shine France

Endemol Shine Group, a U.K. company that creates, produces, and distributes content across scripted and non-scripted genres, has agreed to acquire Shine France S.A.S., a French subsidiary of Balestra Productions, a Canadian company that provides audiovisual services. No transaction terms were released.

Pasta Romana Foods to Acquire Groupe Commensal

Pasta Romana Foods Inc, a Canadian company that produces pasta, has agreed to acquire Groupe Commensal Inc., a Canadian company that produces and offers cooked and ready-to-eat food products. Total transaction value is estimated to be $4.2 million.

Société en commandite Gaz Métro to Acquire Standard Solar

Société en commandite Gaz Métro, a Canadian company that transports and distributes natural gas, has agreed to acquire Standard Solar, Inc., an American company that engages in the development, construction, integration, financing, and installation of solar electric systems in the United States. No transaction terms were released.

Orofino Minerals to Acquire Taor

Orofino Minerals Inc. (TSXV:ORR), a Canadian company that engages in the acquisition and exploration of mineral resource properties, has agreed to acquire Taor L.L.C., a Serbian company that provides mineral exploration services. Total transaction value is estimated to be $3.3 million.

Lait Kaiser; Cult Yogourt to Acquire Laiterie Chagnon LTEE

Lait Kaiser inc., a company that produces milk for customers in Canada, and Cult Yogourt, a Canadian company that produces yogurt, have agreed to acquire Laiterie Chagnon LTEE, a Canadian company that produces and sells dairy products. No transaction terms were released.

Horizon Group of Companies to Acquire Ontario Federation of Food Co-Operatives & Clubs

Horizon Group of Companies Ltd, a Canadian company that distributes organic and natural products in the dry, chill and frozen grocery categories, has agreed to acquire Ontario Federation of Food Co-Operatives & Clubs, a Canadian company that distributes natural and organic food products. No transaction terms were released.

Decipher Energy to Acquire Iona Energy Company

Decipher Energy Limited, a U.K. company that operates in the oil and gas sector, has agreed to acquire Iona Energy Company Plc, a Canadian company that evaluates, acquires, explores, and develops oil and gas properties in the U.K.’s North Sea and Alaska. Total transaction value is estimated to be $9.8 million.

 

Closed Deals

Google Acquires Appbridge Software

Google Inc., has acquired Appbridge Software Inc., a Canadian company that offers enterprise-ready content transformation software to help businesses migrate to Google Apps. No transaction terms were released.

HENGE Baustoff Acquires KOMINEX Minerals + Processing

HENGE Baustoff GmbH, a German company that provides construction materials and chemical construction products, has acquired KOMINEX Minerals + Processing from Opta Minerals Inc., a Canadian company that manufactures, recycles, and distributes industrial minerals, silica-free abrasives, and specialty sands in Canada and internationally. No transaction terms were released.

Laborie Medical Technologies Acquires Andromeda Medizinische Systeme

Laborie Medical Technologies, Inc., a  BMO Capital Partners and Investor AB backed Canadian company that engages in the development, manufacture, and marketing of medical devices and disposables in urology, gynecology, and colorectal fields, has acquired Andromeda Medizinische Systeme GmbH, a German company that develops, produces, and markets surgical and medical instruments. No transaction terms were released.

FirstService Acquires California Closets Orange County

FirstService Corporation (TSX:FSV), a Canadian company that provides property services to residential and commercial customers in the United States and Canada, has acquired California Closets Orange County, a American company that provides custom closets and personalized organization products. California Closets Orange County will operate as a subsidiary of FirstService. No transaction terms were released.

SGS Acquires ILC Micro-Chem

SGS SA (DB:SUVN), a Swiss company that provides inspection, verification, testing, certification, and quality assurance services internationally, has acquired ILC Micro-Chem, Inc., a Canadian company that provides chemical, microbiological, and instrumental analysis, as well as food allergy testing and labelling services for clients in North America and internationally. No transaction terms were released.

Lombart Brothers Acquires INNOVA Medical Ophthalmics

Lombart Brothers, Inc., an American company that manufactures and distributes ophthalmic equipment, has acquired INNOVA Medical Ophthalmics Inc., a Canadian company that manufactures ophthalmic instruments in Canada. No transaction terms were released.

Alternate Health Acquires Clover Trail Capital

Alternate Health Corp. (OTCPK:AHGI), a Canadian health services company that provides cloud-based software solutions in Canada, has acquired Clover Trail Capital, L.L.C., a American investment company that is based in San Antonio, Texas. Total transaction value is estimated to be $24.5 million.

Northeast Truck and Trailer Acquires Provincial Equipment

Northeast Truck and Trailer, a Canadian company that operates as a dealer of utility trailers in Nova Scotia, has acquired Provincial Equipment Limited, a Canadian company that provides new and used transport trailer dealership services in Atlantic Canada. No transaction terms were released.

Desjardins Financial; Fiera Infrastructure Acquire Kemble Water Holdings

Desjardins Financial Corporation, a Canadian holding company operating through subsidiaries that offer insurance products and Fiera Infrastructure Inc., a Canadian company that is a principal investment firm specializing in infrastructure investments, have acquired Kemble Water Holdings Limited, a BT Pension Scheme, Macquarie Infrastructure and Real Assets and Fiera Infrastructure backed U.K. holding company that through subsidiaries provides regulated water and wastewater services. Total transaction value is estimated to be $200 million.

Canada Bread Company Acquires The Stonemill Bakehouse

Canada Bread Company Ltd., a Canadian manufacturer and distributor of fresh and frozen bakery products, has acquired The Stonemill Bakehouse Ltd, a Canadian company that operates a bakery producing bread and bakery products. No transaction terms were released.

Avison Young Acquires Cresa NJ-North/Central

Avison Young (Canada) Inc., a Canadian company that provides commercial real estate solutions and services to owners and occupiers of office, retail, industrial, and multi-family properties, has acquired Cresa NJ-North/Central, LLC, an American company that provides commercial real estate services. No transaction terms were released.

Amazon Web Services Acquires Thinkbox Software

Amazon Web Services, Inc., an American company that provides cloud computing services to organizations in the United States and internationally, has acquired Thinkbox Software Inc., a Canadian company that provides solutions for media and design content creation. No transaction terms were released.

White Owl Family Office Acquires Olon Industries

White Owl Family Office Ltd., a Canadian principal investment firm, has acquired Olon Industries Inc., a Canadian company that designs and manufactures integrated woodworking component products for furniture and cabinet-making industries in North America. No transaction terms were released.

Sammons Renewable Energy Acquires Sorgent.e Hydro Canada

Sammons Renewable Energy, an American company that develops renewable energy projects, has acquired Sorgent.e Hydro Canada Corp., a Canadian company that develops and operates hydroelectric power projects. No transaction terms were released.

Medgate Acquires IQS

Medgate, Inc., a Norwest Venture Partners, Georgian Partners and Adventure Capital backed Canadian company that provides environmental, health, and safety (EHS) software, has acquired IQS, Inc., a American company providing enterprise compliance and quality management software for manufacturing in medical device, aerospace and defense, automotive, discrete and process, and food and beverage industries. No transaction terms were released.

Subsea Global Solutions Acquires All-Sea Enterprises

Subsea Global Solutions, LLC, an American company that provides underwater vessel maintenance and repair services for equipment manufacturers and ship operators around the world, has acquired All-Sea Enterprises Ltd., a Canadian company providing underwater ship repair and maintenance services worldwide. No transaction terms were released.

iris Nation Worldwide Acquires Pricing Solutions

iris Nation Worldwide Limited, a U.K. advertising agency that builds participation brands worldwide, has acquired Pricing Solutions Ltd., a Canadian international pricing strategy consulting company. No transaction terms were released.

VoIP Much Phone Company Acquires VBuzzer

VoIP Much Phone Company, Inc., a Canadian company that provides phone services over broadband Internet connection primarily to home and business customers across North America, has acquired VBuzzer, a Canadian company that develops VoIP software that provides instant messaging, internet telephony, internet fax, mobile SMS, web conferencing, and desktop sharing services. No transaction terms were released.

W Capital Partners; Georgian Partners Acquires Vision Critical Communications

W Capital Partners, a principal investment firm specializing in direct and fund of fund investments, and Georgian Partners, a Canadian venture capital firm specializing in growth equity, early stage, late stage, and expansion stage investments, have acquired Vision Critical Communications Inc., a Difference Capital Financial (TSE:DCF)., TELUS Ventures, W Capital Partners, Kensington Capital Partners, Wellington Financial, Bridgescale Partners, Georgian Partners, Northleaf Capital Partners, OMERS Ventures and RecapHealth Ventures backed Canadian company that designs and develops a cloud-based customer intelligence platform allowing companies to build engaged, secure communities of customers that can be accessed for ongoing, real-time feedback and insight. No transaction terms were released.

ALTAVIA Acquires CloudRaker

ALTAVIA S.A., a French company that provides marketing and publishing services, has acquired CloudRaker Inc., a Canadian company that provides marketing and technology solutions for post- advertising era customers in Canada and internationally. No transaction terms were released.

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