Value Unleashed

Market Update

Fifty-Four Canadian M&A transactions closed this past week. Year to date, M&A closed deal count is 10.3% higher than the comparable period in 2016. The Canadian dollar depreciated by 0.10 cents, ending the week at 73 cents. The TSX was down 0.4% and underperformed the S&P 500 by 0.1% in U.S. dollar terms.

The new issue environment for U.S. middle market loans became more favourable as average total leverage rose to 5.2x EBITDA from 5.0x last week while yields fell by 21 bps to 6.33%, a level that is 41 bps lower than a year ago. According to The Lead Left, lenders are willing to accept a grower basket that is larger as a percentage of EBITDA compared to 2016. Over 50% of lenders surveyed in the Thompson Reuter’s April LPC Conference expect loan recoveries to be somewhat lower than historical average. 

Valitas Insights: Long Term vs. Short Term…Where’s the Payoff?

How do they do it?  In last week’s Valitas Insights article, we reported that the U.S. middle market is experiencing record levels of employment and revenue growth, but private-equity (PE) owned firms are way out ahead of the pack.

So again, how do they do it?  We’ve previously discussed several factors underlying this outperformance, but a recent Harvard Business Review (HBR) article raises an additional compelling explanation.  To find out more, read our full article.

Canadian M&A Transactions[i]

Energy (Announced)

Uranium Energy to Acquire Reno Creek Holdings

Uranium Energy Corp. (AMEX:UEC), a U.S.-based uranium exploration and processing company, has agreed to acquire Reno Creek Holdings Inc., a Pacific Road Capital Management backed Canadian company that owns and operates Reno Creek uranium project in Wyoming. Reno Creek is a subsidiary of Bayswater Uranium (TSXV:BYU). No transaction terms were released.

Energy (Closed)

Questerre Energy Corporation Acquires Minority Interest in Red Leaf Resources

Questerre Energy Corporation (TSX:QEC), a Canadian oil and gas exploration company, has acquired a minority interest in Red Leaf Resources, Inc., a Priviti Capital backed, U.S.-based shale-oil exploration company. No transaction terms were released.

Materials (Closed)

Hartford International Retirement Network Acquires Dynamic Gold

Hartford International Retirement Network, Inc., a U.S.-based retirement investment fund, has acquired a majority stake in Dynamic Gold Corp., a Canadian mineral exploration company. No transaction terms were released.

Brionor Resources Acquires Atala Resources

Brionor Resources Inc. (TSXV:BNR), a Canadian mineral exploration company, has acquired Atala Resources Inc., a Canadian mineral exploration company with gold interests in Argentina. Total transaction value is estimated to be $330 thousand.

THC Biomed Acquires Clone Shipper

THC Biomed Intl Ltd. (CNSX:THC), a Canadian producer of medical marijuana, has acquired Clone Shipper LLC, a U.S.-based manufacturer of plant shipping containers. Total transaction value is estimated to be $1.32 million.

Industrials (Closed)

Congébec Acquires Shamrock Cold Storage

Congébec, Inc., a Desjardins Business Capital régional et coopératif, Fondaction, and Investissement Québec Investment Arm backed, provider of refrigerated storage services in North America, has acquired Shamrock Cold Storage, Inc., a Canadian company also providing refrigerated storage services. No transaction terms were released.

Northstar Scaffold Services Acquires Sky-Hi Scaffolding

Northstar Scaffold Services Inc., a Andover Capital backed Canadian scaffolding company, has acquired Sky-Hi Scaffolding Ltd., a Canadian provider of scaffolding services. No transaction terms were released.

Calian Group Acquires International Safety Research

Calian Group Ltd. (TSX:CGY), a global provider of systems engineering and business technology services, has acquired International Safety Research Inc., a Canadian company developing technological safety solutions for customers around the world. Total transaction value is estimated to be $8.2 million.

Consumer Discretionary (Announced)

Newcap to Acquire NL Broadcasting

Newcap Inc., a Canadian television and radio broadcasting company, has agreed to acquire NL Broadcasting Ltd., a Canadian provider of radio broadcasting services. No transaction terms were released.

Canadian Tire to Acquire Padinox

Canadian Tire Corporation, Limited (TSX:CTC.A), a retail giant in the automotive, sports leisure and home products spaces, has agreed to acquire Padinox Inc., a Canadian cookware manufacturer. No transaction terms were released.

MTY Food Group to Acquire The WORKS Gourmet Burger Bistro

MTY Food Group Inc. (TSX:MTY), a global franchiser and operator of quick-service restaurants and casual dining concepts, has agreed to acquire The WORKS Gourmet Burger Bistro Inc., a Knight's Bridge Capital Partners backed Canadian restaurant operator. No transaction terms were released.

Consumer Discretionary (Closed)

MTY Food Group Acquires Les Restaurants Giorgio

MTY Food Group Inc. (TSX:MTY) has acquired Les Restaurants Giorgio (Amérique) Ltée, a Quebec-based restaurant operator. Total transaction value is estimated to be $300 thousand.

Accenture Acquires The Monkeys

Accenture plc (NYSE:ACN), a global provider of consulting, technology, and outsourcing services, has acquired The Monkeys Pty Limited, an Australian advertisement and brand content agency. No transaction terms were released.

Consumer Staples (Announced)

High Liner Foods to Acquire Rubicon Resources

High Liner Foods Incorporated (TSX:HLF), a Canadian company that processes and markets frozen seafood products, has agreed to acquire Rubicon Resources, LLC, a U.S.-based importer and distributor of seafood products. Total transaction value is estimated to be $107 million, implying a 0.46x revenue multiple.

Gilla to Acquire Vape Brands International

Gilla Inc. (OTCPK:GLLA), a global producer of e-liquids used in vaping hardware and accessories, has agreed to acquire Vape Brands International Inc., a Canadian manufacturer of e-liquids. Total transaction value is estimated to be $3.03 million, implying a 2.16x revenue multiple.

Financials (Closed)

Andrew Agencies Acquires Waggoner Holdings

Andrew Agencies Ltd., a Canadian general insurance and travel agency, has acquired Waggoner Holdings Ltd., a Canadian provider of insurance brokerage services. No transaction terms were released.

Information Technology (Announced)

Cisco Systems to Acquire MindMeld

Cisco Systems, Inc. (NasdaqGS:CSCO), a global designer and manufacturer of Internet Protocol (IP) based networking and other products related to the communications and information technology industry, has agreed to acquire MindMeld, Inc., a Bessemer Venture Partners, In-Q-Tel, Samsung Venture Investment Corporation, Intel Capital, IDG Ventures, KPG Ventures, GV, Liberty Global Ventures, Quest Venture Partners, Fenox Venture Capital, Telefónica Open Future, TenOneTen Ventures, Greylock Partners and Westcott LLC backed American company that develops a voice interface platform for applications and devices. Total transaction value is estimated to be $125 million.

Information Technology (Closed)

Stingray Digital Group Acquires Yokee Music

Stingray Digital Group Inc. (TSX:RAY.A)(TSX:RAY.B), a global leader in providing business-to-business multi-platform music, has acquired Yokee Music LTD, an Israeli provider of three social music apps. No transaction terms were released.

KPMG International Acquires Matchi Holdings

KPMG International, a worldwide provider of auditing, accounting, and taxation advisory services, has acquired Matchi Holdings Limited, a Hong Kong-based company providing fintech matchmaking services. No transaction terms were released.

Millennial Esports Acquires Stream Hatchet

Millennial Esports Corp. (TSXV:GAME), an international gaming and digital media company, has acquired Stream Hatchet S.L., a Plug and Play Spain backed Spanish company providing statistics and analytics for the online game streaming industry. Total transaction value is estimated to be $1.08 million.

Utilities (Closed)

Advance Energy Consortium Acquires Endeavour Energy

Advance Energy Consortium, led by Macquarie Group Ltd. (ASX: MQG), in partnership with British Columbia Investment Management Corporation, The Retail Employees Superannuation Trust, and Qatar Investment Authority, has acquired a 50.4% stake in Endeavour Energy, an Australian power grid company. Total transaction value is estimated to be $5.61 billion, implying a 28.7x EBITDA multiple and a 13.0x revenue multiple.

Groupe Filgo-Sonic Acquires Bell-Gaz ltée

Groupe Filgo-Sonic, a Canadian producer of gasoline and fuel under the Shell brand name, has acquired Bell-Gaz ltée, a company that sells propane gas in Quebec. No transaction terms were released.

Other (Announced)

Brigadier Gold to Acquire Keraderm

Brigadier Gold Limited (TSXV:BRG.H), a Canadian mineral exploration company, has agreed to acquire Keraderm SAS, a Colombian healthcare company that operates a state-of-the-art facility dedicated to the treatment of skin injuries. Total transaction value is estimated to be $5.5 million.

Other (Closed)

Envirosystems Acquires Marine Clean

Envirosystems Incorporated, a Canadian offering industrial, environmental, robotic, and project management services, has acquired Marine Clean Ltd., a Canadian company providing cleaning services across a wide range of industries. No transaction terms were released.

Quantum Energy Acquires Native Son Refinery

Quantum Energy, Inc. (OTCPK:QEGY), a TorQuest backed, U.S.-based oil and gas exploration company, now owns 100% of Quantum Native Processing Partners, LLC, having acquired the 50% ownership interest of Native Son Refinery, Inc. No transaction terms were released.

Roustan Capital Acquires Supreme Brands

Roustan Capital, a Canadian venture capital and private equity firm focused on the hockey industry, has acquired Supreme Brands L.L.C., owner of two significant global hockey brands, TORSPO and CHRISTIAN. No transaction terms were released.

Allen & Co. and Berkeley Counsel Merge to Form Ingenuity

Toronto-based boutique law firms Allen & Co. LLP and Berkeley Counsel have merged to form Ingenuity LLP. No transaction terms were released.

UL Acquires CLEB

UL LLC, a global provider of safety science services, has acquired CLEB, a leader in Canadian building science and building envelope service. No transaction terms were released.

Summit Materials Acquires Winvan Paving

Summit Materials, Inc. (NYSE:SUM), a U.S.-based producer of construction materials, has acquired Winvan Paving Ltd., a company that provides construction, grading and paving services in British Columbia. No transaction terms were released.