Value Unleashed

Market Update

Fourteen Canadian M&A transactions closed this past week. Year to date, M&A closed deal count is 2.6% higher than the comparable period in 2016. The Canadian dollar depreciated by 0.42 cents, ending the week at 79 cents relative to U.S. dollar. The TSX underperformed the S&P 500 by 0.6% in U.S. dollar terms. WTI Crude oil fell by 1.2%, ending the week at $50.17 per barrel.

The new issue environment for U.S. middle market loans became less favourable as average total leverage fell to 5.4x EBITDA from 5.7x last week, while yields rose by 8 bps to 6.35%, a level that is 35 bps lower than a year ago.

According to The Lead Left, fundraising for middle market lending remains strong in 2017. Year to date, Reuters LPC has tracked almost US$35 billion in inflows on the back of US$60B just last year. Direct lending funds continue to make up the biggest piece of the pie, representing 64% of the inflows, while MM CLOs and BDC public equity account for, respectively, 20% and less than 5%.

Valitas Insights: Get the Most Out of Your Merger: Key Activities to Achieve Revenue Synergies

While M&A transactions are driven by an assortment of reasons, the realization of synergies is omnipresent. An acquirer’s focus, post-merger, is more frequently on cost synergies, as they are more tangible and easier to achieve than revenue synergies. In fact, a recent Mckinsey article Merge to grow: Realizing the full commercial potential of your merger revealed that revenue growth of companies involved in large merger deals tends to decline post-transaction. And while many companies do expect revenue synergies to comprise a significant component of total deal synergies, less than a quarter report achieving 80% of their target.

According to Tim Morton, Managing Partner at Prompta Consulting Group, and an expert on post-merger integration:

“Far too often the M&A focus is on achieving cost synergies, [and] the culture, people, processes and ways of working are often overlooked. It’s paramount for companies to have a clearly planned vision of success to support the achievement of M&A revenue synergies.”

So how to get the most out of your merger? Read our full article here to find out.

Canadian M&A Transactions [i]

Materials (Announced)

Osino Resources to be Acquired

Unknown buyers have agreed to acquire Osino Resources Corp., a Canadian gold exploration company. Total transaction value is estimated to be $452 thousand.

Industrials (Announced)

CK Infrastructure Holdings to Acquire 3216444 Nova Scotia Company

CK Infrastructure Holdings Limited (SEHK:1038), a Hong Kong based company that engages in the investment and development of infrastructure projects internationally, has agreed to acquire 3216444 Nova Scotia Company, a Canadian provider of water heater rental services. 3216444 Nova Scotia Company was an investment company of Cheung Kong Property Holdings (SEHK:1113). Total transaction value is estimated to be $715 million.

Industrials (Closed)

Boyd Group has Acquired Concours Collision Centres

The Boyd Group Inc., a Canadian operator of collision repair centers, has acquired Concours Collision Centres Ltd., also a Canadian operator of collision repair centers. No transaction terms were released.

Silent-Aire has Acquired RMI Engineering

Silent-Aire Limited Partnership, a Canadian manufacturer of customized HVAC solutions and data centers, has acquired RMI Engineering Ltd, an Ireland based company that designs, engineers, and manufactures HVAC products. No transaction terms were released.

Kontrol Energy has Acquired Efficiency Engineering

Kontrol Energy Corp. (CNSX:KNR), a Canadian provider of energy efficiency solutions and related technology products, has acquired Efficiency Engineering Inc., a Canadian provider of energy audits, management of facility system solutions, electrical and mechanical design and energy conservation studies. Total transaction value is estimated to be $2.5 million.

Alamo Industrial has Acquired R.P.M. Tech

Alamo Industrial, Inc., a U.S.-based manufacturer of tractor-mounted mowers, brush cutters, and land-clearing equipment, has acquired R.P.M. Tech Inc., a Canadian manufacturer of industrial snow blowers, multifunctional utility vehicles, and heavy transportation maintenance equipment. R.P.M. Tech was a subsidiary of Gestion lamvic Inc.. Total transaction value is estimated to be $16.7 million, reflecting a 0.67x revenue multiple.

Mill Street & Co has Acquired Nottawasaga Mechanical

Mill Street & Co Inc, a Canadian investment company, has acquired Nottawasaga Mechanical, a Canadian provider of heating, air conditioning, and refrigeration contracting services. No transaction terms were released.

Quench USA has Acquired Quench Water Canada

Quench USA Inc., a U.S.-based company manufacturer of water filtration systems and ice dispensers, has acquired Quench Water Canada Inc., a Canadian manufacturer of water filtration systems, coffee machines, and ice dispensers. No transaction terms were released.

COROB has Acquired Novaflow Systems

COROB S.p.A., a Wise SGR backed Italian supplier of advanced tinting equipment for the paints and coatings industry, has acquired Novaflow Systems Inc., a Canadian manufacturer of automated paint, ink, and general dispensing and batching equipment. No transaction terms were released.

Mistras Group has Acquired RAC Group

Mistras Group, Inc. (NYSE:MG), a U.S.-based provider of technology-enabled asset protection solutions, has acquired RAC Group Inc, a Canadian provider of industrial rope access and training services. No transaction terms were released.

Geodex Minerals has Acquired Goldway

Geodex Minerals Ltd. (TSXV:GXM), a Canadian company that engages in metals trading, has acquired Goldway S.R.L., a Bolivian company that engages in gold and metals trading. Total transaction value is estimated to be $927 thousand.

Consumer Discretionary (Closed)

6S Marketing has Acquired Motive Communications

6S Marketing Inc., a Canadian provider of digital marketing services, has acquired Motive Communications Inc., a Canadian provider of social media marketing services. No transaction terms were released.

Camso has Acquired Omni Industrial Tire

Camso Inc., a  Desjardins Business Capital régional et coopératif, Caisse de dépôt et placement du Québec and Fonds régional de solidarité FTQ backed Canadian supplier of tires, wheels, rubber tracks and undercarriage systems, has acquired Omni Industrial Tire, a U.S.-based tire distributor. No transaction terms were released.

Angelcare Monitors has Acquired RSCU Europe

Angelcare Monitors Inc., a Canadian company that provides baby care and monitoring products internationally, has acquired RSCU Europe SAS, a French company that designs and sells lighting systems for children. No transaction terms were released.

Consumer Staples (Announced)

Ontario Teachers Pension Plan to Acquire INTERCOS

Ontario Teachers' Pension Plan Board, a Canadian privately owned pension fund, has agreed to acquire INTERCOS S.p.A., a Unilever Ventures, Tamburi Investment Partners and ClearVue Partners backed Italian supplier of cosmetics products internationally. INTERCOS is a subsidiary of L Catterton. No transaction terms were released.

Healthcare (Announced)

Caisse de dépôt et placement du Québec to Acquire Sebia

Caisse de dépôt et placement du Québec, a Canadian investment company, has agreed to acquire Sebia SA, a Graphite Capital Management, Montagu Private Equity and Astorg Partners backed French in-vitro diagnostics company that focuses on oncology, genetic haemoglobin and metabolic disorders. No transaction terms were released.

Information Technology (Announced)

Voices.com to Acquire Voicebank.net

Voices.com Inc., a Canadian company that operates as an online marketplace for audio and voice over products and services, has agreed to acquire Voicebank.net, Inc., a U.S.-based company that operates as an online platform for casting and project management workflow. No transaction terms were released.

Millennial Esports to Acquire Eden Games

Millennial Esports Corp. (TSXV:GAME), a Canadian gaming and digital media company, has agreed to acquire Eden Games SAS, a French company that develops video racing games. Eden Games was previously jointly held by IDInvest Partners and Atari SA (ENXTPA:ATA). Total transaction value is estimated to be $15.2 million.

Information Technology (Closed)

Bitcoin Crypto Currency Exchange has Acquired KaChingpay.com

Bitcoin Crypto Currency Exchange Corporation (OTCPK:ARSC), a U.S.-based company that develops blockchain-based technology products, has acquired KaChingpay.com Inc., a Canadian company that sells KaChing, a smartphone-based payment and money transfer system. No transaction terms were released.

PlanPlus Global has Acquired FinaMetrica Pty Ltd

PlanPlus Global, a Canadian company that provides financial and investment planning software tools, has acquired FinaMetrica Pty Ltd, an Australian company that provides risk tolerance measurement tools. No transaction terms were released.

VINCI Energies has Acquired ADM Systems Engineering

VINCI Energies, a French company that provides energy and information technology services internationally, has acquired ADM Systems Engineering Ltd., a Canadian company that provides software and engineering solutions for automation, data management, and mechanical design applications. No transaction terms were released.

Motive Studios has Acquired BioWare Montreal

Motive Studios, a Canadian gaming and digital media company, has acquired BioWare Montreal, a company that develops online video games. No transaction terms were released.

Big Bang ERP has Acquired Trimtab Consultants

Big Bang ERP Inc., a Canadian boutique consulting company that provides cloud-based products and solutions, has acquired Trimtab Consultants LLC, a U.S.-based provider of NetSuite cloud software solutions. No transaction terms were released.

Givex has Acquired POS Canada

Givex Corporation, a Canadian provider of cloud based data processing services, has acquired POS Canada Inc., a Canadian provider of full service POS hardware and software solutions to the corporate hospitality and retail sectors. No transaction terms were released.

Pixelworks has Acquired ViXS Systems

Pixelworks Inc. (NasdaqGM:PXLW), a U.S.-based provider of video processing solutions for digital video applications, has acquired ViXS Systems Inc., a Celtic House Venture Partners and CIBC Asset Management backed Canadian provider of media processing and encoding solutions for video over Internet protocol (IP) applications. Total transaction value is estimated to be $47.6 million, reflecting a 0.99x revenue multiple.

Other (Announced)

Naturally Splendid to Acquire Prosnack Natural Foods

Naturally Splendid Enterprises Ltd. (TSXV:NSP), a Canadian company that develops and sells hemp-derived foods, Omega foods, nutritional food enhancers, and related products internationally, has agreed to acquire Prosnack Natural Foods Inc., a Canadian provider of healthy meal replacement products. Prosnack Natural Foods is a subsidiary of iCream Capital Inc. Total transaction value is estimated to be $1.5 million.

Other (Closed)

Woodbridge Foam has Acquired Woodbridge Foampartner Company

Woodbridge Foam Corporation, a Canadian manufacturer of custom moulded foam plastic products, has acquired Woodbridge Foampartner Company, a U.S.-based provider of foam material solutions. Woodbridge Foampartner Company was a subsidiary of Conzzeta AG (SWX:CON). No transaction terms were released.

Rental Equipment has Acquired Ontario Tool & Rental

Rental Equipment Investment Corp., a NewSpring Capital, Southfield Mezzanine Capital and Wessex Capital Partners backed U.S.-based equipment rental holding company, has acquired Ontario Tool & Rental Inc., a Canadian company that provides equipment rental services. Total transaction value is estimated to be $389 million.