Value Unleashed

Market Update

Fifty-one Canadian M&A transactions closed this past week. Year to date, M&A closed deal count is 3.0% higher than the comparable period in 2016. The Canadian dollar depreciated by 1.15 cents, ending the week at 79 cents relative to U.S. dollar. The TSX underperformed the S&P 500 by 0.8% in U.S. dollar terms. WTI Crude oil fell by 0.3%, ending the week at $49.58 per barrel.

The new issue environment for U.S. middle market loans underwent competing changes this week. On one hand, total debt/EBITDA became less favourable, as total leverage fell to 5.7x EBITDA from 5.8x last week. On the other hand, new issue clearing yields became more favourable as yields fell by 7 bps to 6.20%, a level that is 59 bps lower than a year ago.

According to The Lead Left, the average yield of three year U.S. first and second lien structures has widened to 5.46% in the third quarter from 4.96% in the second quarter. One reason behind this is that while refinancing transactions continue to lead in terms of market activity, the share of M&A credits has increased to 40% of the institutional tranches priced so far in this quarter. 

Valitas Insights: Private Equity: Evolving to Meet Current Challenges

Sky high valuations, fierce competition, and scarcity of quality targets…the oft-repeated description of our current deal environment.  But in the face of that, private equity firms remain resilient, continuing to invest (as they must) and outperforming their public market peers.  According to a recent Pitchbook report, U.S., sponsor-backed acquisitions have increased from 24.7% of all transactions in Q1, 2016 to 29.8% in Q2, 2017.  As for performance, the data indicates that even bottom-ranked PE firms are outperforming the public markets over a one and fifteen-year time horizon, and their top-ranked peers are generating considerably higher returns.

In the first half of 2017, U.S. PE fundraising continued to thrive, bringing along the associated need to invest.  As one industry observer points out: “The simple fact is that if sponsors don’t do deals, they fade away”[1].  But how do they do it in this seller’s market? Based on a review of several industry reports[2] and our own experience, several clear trends emerge…

To learn more, read our full article.

Canadian M&A Transactions[i]

Materials (Announced)

Disturbance Technology to Acquire ILedor Exploration

Disturbance Technology Inc., a Canadian internet technology company, has agreed to acquire ILedor Exploration Corporation, a Canadian mineral exploration company. No transaction terms were released.

Industrials (Announced)

IMCD to Acquire L.V. Lomas

IMCD N.V. (ENXTAM:IMCD), a Fidelity Management & Research, Bain Capital and Stichting Nieuw Oosteinde backed distributor of specialty chemicals, pharmaceuticals and food ingredients internationally, has agreed to acquire L.V. Lomas Inc., a Canadian distributor of specialty chemicals, ingredients, and raw materials.  No transaction terms were released.

Tribute Resources to Acquire Tocardo International

Tribute Resources Inc. (TSXV:TRB), a Canadian developer of energy projects nationally, has agreed to acquire Tocardo International BV, a Repsol New Energy Ventures S.A. backed Dutch provider of tidal energy solutions. Total transaction value is estimated to be $2.1 million.

Industrials (Closed)

Vaco Acquires Lannick Contract Solutions

Vaco LLC, a Quad-C Management backed U.S.-based recruitment and consulting company, has acquired Lannick Contract Solutions Inc., a Canadian recruitment and consulting company focused on the finance, accounting, and IT sectors. No transaction terms were released.

Metro Supply Chain Acquires National Fulfillment Services

Metro Supply Chain Group Inc., a Canadian provider of third-party logistics services, has acquired National Fulfillment Services Inc., a U.S.-based fulfillment service company that provides solutions for distribution, customer care, and order management. No transaction terms were released.

Danatec Educational Services Acquires ESPS Electrical Safety Program Solutions

Danatec Educational Services Ltd., a Canadian publisher of occupational health and safety training materials, has acquired ESPS Electrical Safety Program Solutions Inc., a Canadian provider of specialized electrical safety consulting services and products. No transaction terms were released.

Valterra Products Acquires Go Power! Electric

Valterra Products LLC, a Brookside Equity Partners and G. Scott Capital Partners backed U.S.-based manufacturer and distributor of recreational vehicle plumbing equipment and supplies, has acquired Go Power! Electric Inc., a Canadian company that manufactures and markets solar power solutions. Go Power! Electric was a subsidiary of Carmanah Technologies (TSX:CMH). Total transaction value is estimated to be $24.4 million.

Carmanah Technologies Acquires Vega Industries

Carmanah Technologies Corporation (TSX:CMH), a Canadian company that designs and manufactures signaling and solar lighting solutions for infrastructure projects internationally, has acquired Vega Industries Ltd., a New Zealand based company that provides lighting solutions for marine, land, and air navigation. Total transaction value is estimated to be $11.2 million.

StorageVault Canada Acquires Sentinel Self-Storage

StorageVault Canada Inc. (TSXV:SVI), a Canadian operator of self-storage and portable storage facilities, has acquired Sentinel Self-Storage Corporation, a Canadian operator of self-storage facilities. Total transaction value is estimated to be $396 million.

Consumer Discretionary (Announced)

ALDO to Acquire Camuto Group

The ALDO Group Inc., a Canadian company that designs and manufactures footwear and accessories internationally, has agreed to acquire Camuto Group Inc., a U.S.-based designer and manufacturer of fashion footwear and accessories. No transaction terms were released.

Metro to Acquire MissFresh

Metro Inc. (TSX:MRU), a Canadian grocery retailer and distributor, has agreed to acquire MissFresh Inc., a Canadian company that provides ready-to-cook meal delivery services. No transaction terms were released.

Consumer Discretionary (Closed)

Rideau Acquires Pressed Metal Products

Rideau Inc., a Fondaction backed Canadian company that provides employee recognition and reward solutions, has acquired Pressed Metal Products LTD., a Canadian company that manufactures custom metal products and emblems. No transaction terms were released.

Groupe Park Avenue Acquires Mercedes-Benz de Québec

Groupe Park Avenue Inc., a Canadian company that owns and operates auto dealerships, has acquired Mercedes-Benz de Québec, a Mercedes-Benz dealership. Mercedes-Benz de Québec was a subsidiary of Chatel Automobiles Ltée. No transaction terms were released.

Gildan Activewear Acquires Swift Spinning

Gildan Activewear Inc. (TSX:GIL), a Canadian provider of premium activewear internationally, has acquired Swift Spinning Inc., a U.S.-based manufacturer of cotton ring spun yarns. No transaction terms were released.

Healthcare (Announced)

Hubble Connected to Acquire Kaishi

Hubble Connected Ltd, a Canadian provider of Internet of Things (IoT) connected solutions, has agreed to acquire Kaishi Pte. Ltd., an Allianz and BCG Digital Ventures backed Singapore-based company that sells fetal heart-rate listening devices and women’s healthy lifestyle bracelets internationally. No transaction terms were released.

Healthcare (Closed)

Victory Square Health Acquires Insight Diagnostics

Victory Square Health Inc., a Canadian developer of personalized health technology solutions, has acquired Insight Diagnostics Inc., a Canadian provider of health diagnostics services. No transaction terms were released.

Profound Medical Acquires Wing Medical Oy

Profound Medical Corp. (TSXV:PRN), a Canadian developer of medical technologies for prostate cancer patients, has acquired Wing Medical Oy, a Finland-based provider of real-time precision MR imaging solutions. Wing Medical Oy was a subsidiary of Koninklijke Philips N.V. (ENXTAM:PHA). Total transaction value is estimated to be $6.6 million.

Financials (Closed)

Arthur J. Gallagher & Co Acquires GPL Assurance

Arthur J. Gallagher & Co. (NYSE:AJG), a U.S.-based provider of insurance brokerage and risk management services internationally, has acquired GPL Assurance Inc., a Canadian provider of insurance brokerage services. No transaction terms were released.

Information Technology (Announced)

Dundee Precious Metals to Acquire MineRP

Dundee Precious Metals Inc. (TSX:DPM), a Canadian gold mining exploration and development company, has agreed to acquire MineRP Holdings Proprietary Limited, a South African provider of software solutions for the mining industry. No transaction terms were released.

Acana Capital to Acquire Blockchain Technology Group

Acana Capital Corp. (CNSX:ACM), a Canadian investment company, has agreed to acquire Blockchain Technology Group Inc., a Canadian developer of real-time search, data analytics, and risk assessment tools for blockchain-based technologies. Total transaction value is estimated to be $389 million.

Information Technology (Closed)

North 6th Agency Acquires Atlas Communications

North 6th Agency Inc., a U.S.-based provider of public relations and brand communication services, has acquired Atlas Communications Inc., a Canadian provider of social media marketing services. No transaction terms were released.

Novatech Analytical Solutions Acquires G.A.S. Analytical Systems

Novatech Analytical Solutions Inc., a Canadian supplier of analytical instruments and solutions, has acquired G.A.S. Analytical Systems Ltd., a Canadian distributor of analytical instruments and equipment. No transaction terms were released.

Stingray Digital Group Acquires SBA Music

Stingray Digital Group Inc. (TSX:RAY.A), a Canadian provider of multi-platform music and in-store media solutions internationally, has acquired SBA Music Pty Ltd, an Australian provider of in-store media solutions. No transaction terms were released.

Other (Closed)

Flight Centre Acquires Les Voyages Laurier Du Vallon

Flight Centre North America, a Canadian travel agency with international operations, has acquired Les Voyages Laurier Du Vallon Inc., a Canadian travel agency with operations in Québec. No transaction terms were released.

McDougall Insurance Acquires Monkman Gracie and Johnston Insurance

McDougall Insurance Brokers Limited, a Canadian company that provides insurance and financial services, has acquired Monkman Gracie and Johnston Insurance Brokers Ltd., a Canadian company that provides insurance brokerage services. No transaction terms were released.