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Canadian M&A Market Recap: Week Ended Oct 21, 2016

  • Posted By: Karen Fisman, Louis Goldberg, Miranda Li, Michael Mazza and Paris Aden

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Market Update

Last week’s deal count of 16 was the same as the 10 year low, while the TSX hit a new 52-week high. Oil prices reversed early week losses despite a stronger U.S. dollar, as optimism in the market remains. The TSX composite had a strong rally last week, up 2.4% and outperforming the S&P 500 index by 0.9% last week on a U.S. dollar basis.

U.S. debt markets are gaining traction as there continues to be greater than three syndicated deal observations in 30-day rolling bank books as well as higher debt/EBITDA multiples.

Valitas Insights: Do 89% of Canadian Business Owners Lack Courage?

Is Corporate Canada sitting on mountains of “dead money” rather than investing it productively? Mark Carney, former Bank of Canada governor, famously stated so back in 2012, suggesting a level of caution amongst business leaders that “could be regarded as excessive”.  Carney worried that this excessive caution, or lack of courage, would limit Canada’s ability to compete in the global economy.

Fast forward to 2016…

Over the past four years, since Carney’s rebuke, have Canadian business leaders become more courageous in their investment decisions? And whether they have or not, is courage actually linked to business success?

According to a recent Deloitte report, the answer to the first question is a resounding no. Canadian businesses still lack courage. To reach this conclusion, Deloitte surveyed 1,200 Canadian business leaders and measured courage based on several core elements including being provocative and challenging the status quo, taking calculated risks and doing what is right. While 44% of those surveyed believed that they were leading courageous organizations, only 11% were actually found to be courageous.

That finding is unfortunate, as the survey also reveals a clear link between business courage and success.  Of those surveyed, courageous businesses experienced higher revenue growth than their more fearful counterparts.  Additionally, fearful businesses were twice as likely to experience revenue decreases.  Courageous businesses invested more in innovation and product development and were more likely to hire new employees. The findings suggest that while courage might not guarantee success, it is an important, even critical component.  Lacking courage, companies fail to make new investments and pursue new ideas and opportunities, settling instead for the status quo and eventually falling behind.

Given the relationship between courage and business success, how does a business owner assess whether he or she is providing courageous leadership? Self-evaluation might not yield success, given the significant perception gap found in the study.  While many of the companies surveyed believed they were courageous, in reality, 75% of those were mistaken.

So how do business leaders bridge the perception gap in measuring the courage of their organizations?

Different perspectives play an important role in any honest assessment.  Recall the story of The Emperor’s New Clothes.  Absent the little boy’s voice crying out that the emperor was actually naked, the crowd was willing to just go along.  When management shares similar views and lacks diverse voices, bringing in an external perspective can help to bridge the perception gap and accurately assess business courage. 

Objective assessment of a company’s positioning opens the door for business owners to take the next step in a well-informed manner:  mapping out their company’s route to business courage. Management, with or without external advice, still faces the challenge of translating the elements of courageous business decision making into a reality.  Encouraging a culture of courage throughout the organization with appropriate employee incentives is a powerful tool.  

In becoming more courageous, challenging the status quo and taking calculated risks, business owners increase their growth potential and gain ground on their competitors.

Weekly Canadian Private Market M&A Report

Announced Deals

Tanqueray Exploration to Acquire ImmunoPrecise Antibodies

Tanqueray Exploration Limited (TSXV:TQY.H), an exploration stage company that participates in various resource exploration projects in Canada, has agreed to acquire ImmunoPrecise Antibodies Limited, which focuses on antibody development. Total transaction value is estimated to be $2.3 million.

Stantec to Acquire Architecture | Tkalcic Bengert

Stantec Incorporated (TSX:STN), a Canadian company that provides professional consulting services in the area of infrastructure and facilities for clients in the public and private sectors in Canada, the United States, and internationally, has agreed to acquire Architecture | Tkalcic Bengert, an architectural firm in Edmonton. No transaction terms were released.

Caisse de dépôt et placement du Québec to Acquire TVS Logistics Services

Caisse de dépôt et placement du Québec has agreed to acquire TVS Logistics Services Limited, a Goldman Sachs Group, Merchant Banking Division, KKR & Co., TVS Capital Funds Limited, and Tata Capital backed business that provides logistics and warehousing solutions. No transaction terms were released.

New Look Vision Group to Acquire Visions One Hour Optical

New Look Vision Group Incorporated (TSX:BCI), which provides eye care products and services in eastern Canada, has agreed to acquire Visions One Hour Optical Limited, a Canadian business that owns and operates stores that sell optical products in British Columbia. Total transaction value is estimated to be $6.6 million.

JM Capital II to Acquire Lithium Evolution

JM Capital II Corporation (TSXV:JCI.H), a Canadian capital pool company, has agreed to acquire Lithium Evolution Corporation, a Canadian company that owns a lithium mining project. Total transaction value is estimated to be $100,000.

Golden Dawn Minerals to Acquire Kettle River Resources

Golden Dawn Minerals Incorporated (TSXV:GOM), which engages in the acquisition and exploration of mineral resource properties in Canada, has agreed to acquire Kettle River Resources Limited, an exploration stage company that engages in the exploration, development, and exploitation of mineral properties in Canada. Total transaction value is estimated to be $1.6 million.

Mincom Capital to Acquire Braille Holdings

Mincom Capital Incorporated (TSXV:MOI), which engages in the acquisition and development of mineral properties in North America, has agreed to acquire Braille Holdings Incorporated, a U.S. manufacturer of lithium-ion batteries. Total transaction value is estimated to be $2.6 million.

Gay Lea Foods Co-operative to Acquire The Stirling Creamery

Gay Lea Foods Co-operative Limited, which manufactures and markets dairy products in Canada, has agreed to acquire The Stirling Creamery Limited, a butter manufacturing company. No transaction terms were released.

Ontario Teachers' Pension Plan to Acquire Constellation Brands Canada

Ontario Teachers' Pension Plan has agreed to acquire Constellation Brands Canada, Incorporated, which produces and markets wines and related products in Canada and the United States. Total transaction value is approximately $1.0 billion.

Altair Resources to Acquire 1077086 B.C.

Altair Resources Incorporated (TSXV:AVX), an exploration stage company that engages in the acquisition, exploration, and development of mineral properties in Canada, has agreed to acquire 1077086 B.C. Limited, a Canadian company that owns a lithium exploration property. Total transaction value is estimated to be $0.3 million.

Onex Corporation to Acquire Moran Foods

Onex Corporation (TSX:OCX) has agreed to acquire Moran Foods, LLC, which owns, operates, and licenses a chain of discount grocery stores in the United States. Total transaction value is approximately $1.8 billion.

Squire Mining to Acquire Strategic Aviation Services

Squire Mining Limited (CNSX:SQR), a mineral exploration company that acquires, explores for, and develops mineral resource properties primarily in Canada, has agreed to acquire Strategic Aviation Services Limited, which provides multi-functional aviation services at airports in Canada. No transaction terms were released.

Strategic Internet Investments to Acquire Parsan Turizm Anonim Sirketi

Strategic Internet Investments, Incorporated (OTCPK:SIII), a development stage company that focuses on the acquisition of real estate development projects located in Europe and the Middle East, has agreed to acquire Parsan Turizm Anonim Sirketi, which owns and operates the Renaissance Izmir Hotel. Total transaction value is estimated to be $62.5 million.

Brookfield Asset Management to Acquire Reliance Infratel

Brookfield Asset Management Incorporated (TSX:BAM.A), a publicly owned asset management holding company, has agreed to acquire Reliance Infratel Limited, a Fortress Investment Group,  Soros Fund Management, GLG Partners, D.A. Capital Management, HSBC Principal Investments, and New Silk Route backed business that builds, owns, and operates telecommunication towers, optic fiber cable (OFC) network, and related assets; and provides passive infrastructure assets on a shared basis to wireless and other communications service providers, as well as to non-communications customers under long-term contracts. Total transaction value is approximately $2.2 billion.

Closed Deals

The Blue Goose Cattle Acquires Tender Choice Foods

The Blue Goose Cattle Company Limited, a Dundee Corporation and Serruya Private Equity backed business that produces and provides organic beef products for the food industry, has acquired Tender Choice Foods, Incorporated, which engages in processing, packing, and distributing meat products. No transaction terms were released.

MUNDO Media Acquires 36 LABS

MUNDO Media, Incorporated, which offers online media content and research services to advertisers in Canada, has acquired 36 LABS, LLC, which offers marketing consulting and lead generation services. No transaction terms were released.

Ignite Marketing Analytics Acquires ThinkVine

Ignite Marketing Analytics, which develops marketing technology software for marketing planning, attribution, forecasting, and optimization activities, has acquired ThinkVine Corporation, which develops marketing technology software for marketing planning, attribution, forecasting, and optimization activities. No transaction terms were released.

MyHealth Partners Acquires Credit Valley Imaging Associates

MyHealth Partners Incorporation, a Canadian company, has acquired Credit Valley Imaging Associates, which specializes in medical imaging services. No transaction terms were released.

Metals Creek Resources Acquires The Rogerson Lake Claims

Metals Creek Resources Corporation (TSXV:MEK), an exploration stage company that engages in the mineral property acquisition, exploration, and development activities in Canada, has acquired The Rogerson Lake Claims. No transaction terms were released.

Transcontinental Acquires FLEXSTAR Packaging

Transcontinental Incorporated (TSX:TCL.A), which engages in the print and digital media, publishing, and flexible packaging businesses primarily in Canada and the United States, has acquired FLEXSTAR Packaging Incorporated, a Canadian company that manufactures custom printed, laminated, and flexible roll-stock and specialty films for consumer and industrial markets in North America. No transaction terms were released.

Vemba Acquires Epoxy Sistem Srl

Vemba Corporation, an Upfront Ventures, John S. and James L. Knight Foundation, Bertelsmann Digital Media Investments, and iGan Partners backed business that operates a video exchange and management platform for video producers, video publishers, and content marketers, has acquired Epoxy Sistem Srl, an Italian company. No transaction terms were released.

 

The Logit Group Acquires Cido Research Americas

The Logit Group Incorporated, which provides market research data collection services, has acquired Cido Research Americas, a market research company. No transaction terms were released.

Hamilton Robinson Capital Partners Acquires Unfiller Systems

Hamilton Robinson Capital Partners, an American company, has acquired Unfiller Systems Inc. which is a designer and manufacturer of equipment serving the commercial baking and industrial food production industries. No transaction terms were released. 

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