Market Update

Forty-six Canadian M&A transactions closed this past week. Year to date, M&A closed deal count is 2.2% higher than the comparable period in 2016. The Canadian dollar depreciated by 0.22 cents, ending the week at 75 cents. The TSX outperformed the S&P 500 by 0.3% in U.S. dollar terms. WTI Crude oil fell by 3.8%, ending the week at $43.27 per barrel.

Covenant-lite loan structures are not creeping just into the middle market. According to The Lead Left, there is a loosening of terms across the board. One loan manager said: “things are worse than 2006. Credit agreements are one-sided”. Strong competition among arrangers for deal mandates appears to be causing a deterioration of loan structures. 

Valitas Insights: Canadian Venture Capital and Private Equity Activity Continue to Diverge

In our recent review of Canadian Venture Capital (VC) and Private Equity (PE) activity for the first nine months of 2016, we reported a significant difference in trends.  While VC investment exceeded the four-year quarterly average, PE investment and deal volume lagged relative to the same period of the previous year.

According to the latest first quarter 2017 VC and PE update by the Canadian Venture Capital and Private Equity Association, this divergence in activity continues.

Read our full analysis here.

Canadian M&A Transactions[i]

Materials (Closed)

Shore Gold has Acquired Fort à la Corne Joint Venture

Shore Gold Inc. (TSX:SGF), a Canadian mineral exploration and development company, has acquired Fort à la Corne Joint Venture, a Canadian diamond mining and exploration company. No transaction terms were released.

Industrials (Announced)

Stantec to Acquire RNL Design

Stantec Inc. (TSX:STN), a Canadian company that provides design consulting services for infrastructure and facilities projects internationally, has agreed to acquire RNL Design, Inc., a U.S.-based company that provides integrated architectural, interior and urban design services. No transaction terms were released.

Apollo Global Management and Ontario Teachers’ Pension Plan to Jointly Acquire CareerBuilder

Apollo Global Management LLC (NYSE:APO), a U.S.-based private equity firm, and Ontario Teachers' Pension Plan Board, a Canadian privately owned pension fund, have agreed to jointly acquire CareerBuilder LLC, a U.S.-based online job hunting company. CareerBuilder is owned by Tribune National Marketing Company, TEGNA Inc, and McClatchy Co. Total transaction value is estimated to be $626 million, reflecting a 0.88x revenue multiple.

MAN Diesel & Turbo to Acquire Aspin Kemp & Associates

MAN Diesel & Turbo SE, a Germany-based company that provides large-bore diesel engines and turbomachinery for marine and stationary applications internationally, has agreed to acquire Aspin Kemp & Associates, a Canadian provider of power supply, energy management and drive systems for marine applications. No transaction terms were released.

Industrials (Closed)

Avrio Capital has Acquired POS Management

Avrio Capital Inc., a Canadian venture capital and private equity firm, has acquired POS Management Corp., a Canadian company that provides bioprocessing applied research services. No transaction terms were released.

Agora Holdings has Acquired RiNet Telecom

Agora Holdings Inc. (OTCPK:AGHI), a Canadian software development company, has acquired RiNet Telecom, a Canadian company that provides deployment and maintenance services for telecommunications network systems. No transaction terms were released.

Dutch Infrastructure Fund has Acquired Autovía de Aragón Tramo 1

Dutch Infrastructure Fund B.V., a Netherlands-based infrastructure investment firm, has acquired Autovía de Aragón Tramo 1 S.A, a Spain-based operator of motorways with operations in Canada. No transaction terms were released.

Power Energy has Acquired Lumenpulse Group

Power Energy Corporation., a Canadian investment company, has acquired Lumenpulse Group (TSX:LMP), a Fonds de solidarité FTQ, Fidelity Investments and FMR Investments backed Canadian manufacturer of high performance, specification-grade LED lighting solutions. Total transaction value is estimated to be $590 million, reflecting a 40x EBITDA multiple and a 2.92x revenue multiple.

Consumer Discretionary (Announced)

Palliser Furniture Upholstery to Acquire Casana Furniture Company

Palliser Furniture Upholstery Ltd., a Canadian company that designs and manufactures furniture, has agreed to acquire Casana Furniture Company Ltd., a Canadian company that manufactures modern and transitional furniture products. No transaction terms were released.

Sangoma Technologies to Acquire VoIP Supply

Sangoma Technologies Corporation (TSXV:STC), a Canadian provider of hardware and software components for IP communications systems, has agreed to acquire VoIP Supply LLC, a U.S.-based online retailer of voice over IP hardware solutions. Total transaction value is estimated to be $5.2 million.

MTY Food Group to Acquire Dagwoods Sandwiches Et Salads

MTY Food Group Inc. (TSX:MTY), a Canadian operator and franchisor of quick-service and casual dining restaurants internationally, has agreed to acquire Dagwoods Sandwiches Et Salads Inc., a Canadian company that owns and operates restaurants. Total transaction value is estimated to be $3.0 million, reflecting a 0.38x revenue multiple.

Cuba Ventures to Acquire International Business & Travel Opportunities

Cuba Ventures Corp. (TSXV:CUV), a Canadian investment company, has agreed to acquire International Business & Travel Opportunities LLC, a U.S.-based travel agency that provides educational and cultural trips to Cuba. Total transaction value is estimated to be $25 thousand.

Consumer Discretionary (Closed)

National Tire Distributors has Acquired Pneus Supérieurs

National Tire Distributors Inc., a Canadian distributor of tires and automotive wheels, has acquired Pneus Supérieurs Inc., a Canadian distributor of tires. Pneus Supérieurs Inc was a subsidiary of Pneus Bélisle Inc. No transaction terms were released.

Healthcare (Closed)

Mohawk Shared Services has Acquired Medbuy

Mohawk Shared Services Inc, a Canadian company that provides linen, laundry and supply chain management services to hospitals, has acquired Medbuy Corporation, a Canadian healthcare group purchasing company. No transaction terms were released.

Information Technology (Announced)

Mediagrif Interactive Technologies to Acquire Orckestra

Mediagrif Interactive Technologies Inc. (TSX:MDF), a Canadian provider of e-commerce and interactive business software solutions internationally, has agreed to acquire Orckestra Inc., a Fondaction, Fonds de solidarité FTQ, and W Investments backed Canadian provider of digital unified and omnichannel commerce solutions for the retail and manufacturing industries. No transaction terms were released.

Information Technology (Closed)

Sverica Capital Management has Acquired iWave Information Systems

Sverica Capital Management LLC, a U.S.-based private equity firm, has acquired iWave Information Systems Inc., a Canadian company that provides prospect research and screening software solutions for non-profit organizations. No transaction terms were released.

Misys has Acquired DH Corporation

Misys Limited, a Vista Equity Partners, Credit Suisse and European Capital Asset Management backed U.K.-based company that provides a portfolio of financial services software for sale in the United Kingdom and internationally, has acquired DH Corporation, an 1832 Asset Management L.P. backed  Canadian company that provides payments, lending, and financial services solutions internationally. Total transaction value is estimated to be $4.7 billion, reflecting a 14.7x EBITDA multiple and a 2.77x revenue multiple.

Real Estate (Announced)

Blackstone to Acquire Office Group

The Blackstone Group L.P. (NYSE:BX), a U.S.-based private equity firm, has agreed to acquire The Office Group Limited, a U.K.-based company, with operations in Canada, that provides flexible and co-operational workspace solutions. No transaction terms were released.

Real Estate (Closed)

Starlight Investments has Acquired North 7th Street Acquisition

Starlight Investments Ltd, a Canadian real estate investment firm, has acquired North 7th Street Acquisition LP, a U.S.-based company, with operations in Canada, that owns and operates residential real estate properties. Total transaction value is estimated to be $81.3 million, reflecting a 13.53x revenue multiple.

Other (Announced)

Meltwater News to Acquire Infomart

Meltwater News Canada Inc., a provider of online media intelligence and analytical services, has agreed to acquire Infomart, a Canadian media monitoring company. Infomart was a subsidiary of Postmedia Network Canada Corp. Total transaction value is estimated to be $38.2 million.

Phoenix Metals to Acquire F4 Environmental Solutions

Phoenix Metals Corporation (OTCPK:AKAV.F), a Canadian mineral exploration and development company, has agreed to acquire F4 Environmental Solutions Ltd., a Canadian company that provides a portfolio of products and services to aid in the remediation of contaminated soil and water sites. No transaction terms were released.

N&W Global Vending to Acquire Les Entreprises Cafection

N&W Global Vending S.p.A., a Lone Star Funds backed Italy-based manufacturer of automatic snack and beverage vending machines, has agreed to acquire Les Entreprises Cafection Inc., a Canadian manufacturer of coffee vending machines. No transaction terms were released.

Columbia Pacific Advisors to Acquire Hawthorn Retirement Group

Columbia Pacific Advisors LLC, a U.S.-based investment firm, has agreed to acquire Hawthorn Retirement Group LLC, a U.S.-based owner and operator of senior housing communities with operations in Canada. No transaction terms were released.

Other (Closed)

Lynx Equity has Acquired G & W Commercial Flooring

Lynx Equity Limited, a Fengate Capital Management, Windsor Private Capital and Labourers' Pension Fund of Central and Eastern Canada backed Canadian private equity firm, has acquired G & W Commercial Flooring Inc., a U.S.-based supplier of commercial flooring products and services. No transaction terms were released.

Freshii has Acquired MHD

Freshii Inc. (TSX:FRII), a Canadian health casual restaurant chain with international operations, has acquired MHD LLC, a U.S.-based entity that holds the Freshii master franchise agreement for the Chicago metropolitan area. Total transaction value is estimated to be $5.4 million.

Alasko Foods has Acquired FooDelicious

Alasko Foods Inc., an L Catterton, Fondaction and Avrio Capital Inc. backed Canadian distributor of frozen fruits and vegetables, has acquired FooDelicious Inc., a Canadian company that packages and distributes frozen fruits and vegetables. No transaction terms were released.

Enthusiast Gaming has Acquired Destructoid

Enthusiast Gaming Inc., a Canadian company that operates social media platforms and live events exclusively for video gamers, has acquired Destructoid, a U.S.-based independent gaming news website. No transaction terms were released.

Adobe Systems has Acquired Mettle

Adobe Systems Incorporated (NasdaqGS:ADBE), a U.S.-based provider of diversified virtual security and software solutions, has acquired Mettle, a Canadian developer of 360-degree and virtual reality software. No transaction terms were released.

Envoy Group has Acquired Bit Return

Envoy Group Corp. (OTCPK:ENVV), a U.S.-based shell company seeking to operate adult day care centers, has acquired Bit Return Inc., a Canadian developer of Blockchain technology for secure database, network and currency applications. No transaction terms were released.

Tricor Pacific Founders Capital has Acquired Keybrand Foods

Tricor Pacific Founders Capital Inc., a Canadian private equity firm, has acquired Keybrand Foods, a Canadian manufacturer of branded and private label salads and hand-rolled products. No transaction terms were released.