Value Unleashed

Market Update

Seventy Canadian M&A transactions closed this past week. Year to date, M&A closed deal count is 4.4% higher than the comparable period in 2016. The Canadian dollar appreciated by 0.50 cents, ending the week at 79 cents relative to the U.S. dollar. The TSX outperformed the S&P 500 by 1.0% in U.S. dollar terms. WTI Crude oil rose by 2.4%, ending the week at $56.98 per barrel.

According to The Lead Left, U.S.-focused mezzanine fundraising has experienced a sharp year-on-year decline in 2017. Whereas 31 funds secured $28 billion in capital in 2016 and surpassed previous records set in 2008, approximately $5 billion in capital has been raised so far in 2017.

Valitas Insights: Management Diligence – The Power of a Leadership Blueprint

There are a number of factors that PE investors consider when analyzing a potential acquisition target. However, according to a recent report, A View from Both Sides – How PE firms and sellers can form wise partnerships, firms perform rigorous due diligence on two of the most significant factors, operations and product offering, but treat the third factor, management team capability, more casually. We spoke with Richard Davis, Ph.D., CEO of Kilberry, a leadership advisory firm, and one of the authors of the report, who provided insights into why this occurs, and how rigorous management due diligence can drive future value creation. 

To learn more, read our full article.

And on other topics…

Know your bidder – why sell-side due diligence is so critical:  Paris Aden provides answers and insights in Part 2 of his interview with Firmex.  And if you missed Part 1, you can find it here.

Canadian M&A Transactions[i]

Energy (Announced)

         Posco Daewoo to Acquire KIS Devonian

Posco Daewoo Corporation (KOSE:A047050), a South Korean trading company that engages in natural resource development and other businesses worldwide, has agreed to acquire KIS Devonian Canada Corporation, a Canadian company that develops tight oil gas properties. Total transaction value is estimated to be $132 million.

Materials (Announced)

Spicers Canada to Acquire Shippers Supply

Spicers Canada Limited, a company that distributes fine paper, media signage, and industrial packaging products and equipment, has agreed to acquire Shippers Supply Inc., a Canadian company that manufactures and sells packaging supplies and warehouse equipment. No transaction terms were released.

Trueclaim Exploration to Acquire New Ruby Mining

Trueclaim Exploration Inc. (TSXV:TRM), a Canadian company that engages in the exploration and development of precious and base metal properties, has agreed to acquire New Ruby Mining Corp., a Canadian company that offers gold and silver mining and exploration services. Total transaction value is estimated to be $2 million.

Industrials (Announced)

          Structural Monitoring Systems to Acquire Anodyne Electronics Manufacturing

Structural Monitoring Systems Plc (ASX:SMN), an Australian company that, through its subsidiaries, develops and commercializes structural health monitoring technology, has agreed to acquire Anodyne Electronics Manufacturing Corp., a Canadian company that designs and manufactures electronics for the aerospace industry. Total transaction value is estimated to be $10 million.

Industrials (Closed)

          Canada Cartage System has Acquired Doyle Transportation

Canada Cartage System Limited, a Nautic Partners and Constitution Capital Partners backed company that provides fleet outsourcing transportation and supply chain solutions, has acquired Doyle Transportation, a Canadian company that offers fleet outsourcing, full truckload (FTL), and less than truckload (LTL) solutions. No transaction terms were released.

Novacap has Acquired Leading Edge Geomatics

Novacap, a Canadian private equity and venture capital firm, has acquired Leading Edge Geomatics LTD., a Canadian company that provides aerial survey and geomatics services and solutions. No transaction terms were released.

Agrico Canada has Acquired Crop Management Network

Agrico Canada L.P., a company that distributes dry and liquid fertilizer products to agricultural-retailers across Canada and part of the United States, has acquired Crop Management Network, a Canadian company that operates a network of dealers specializing in crop inputs and products such as fertilizers. No transaction terms were released.

Consumer Discretionary (Closed)

          PureFacts Financial Solutions has Acquired K2 Digital

PureFacts Financial Solutions Inc., a Canadian company that provides software and consulting solutions for the wealth management industry, has acquired K2 Digital, a Canadian company that provides digital marketing and strategic advisory services. No transaction terms were released.

Beringer Capital has Acquired BrandShop

Beringer Capital, a Canadian private equity firm, has acquired BrandShop LLC, a U.S company that provides digital commerce solutions for Fortune 1000 companies. BrandShop was an investment company of Veronis Suhler Stevenson LLC. No transaction terms were released.

Consumer Staples (Announced)

         Isodiol International to Acquire Bradley's Brand

Isodiol International Inc. (CNSX:ISOL), a Canadian company that develops and manufactures consumer products in Canada and the United States, has agreed to acquire Bradley's Brand, LTD, a U.K. company that manufactures and distributes hemp oil and nicotine e-liquids. No transaction terms were released.

Nutritional High International to Acquire Calyx Brands

Nutritional High International Inc. (OTCPK:SPLI.F), a Canadian company that operates in the medical marijuana, retail marijuana, and hemp infused products sectors in the United States, has agreed to acquire Calyx Brands, Inc., a Hypur Ventures backed American company that engages in the distribution, transportation, marketing, and promotion of cannabis and hemp products. No transaction terms were released.

Consumer Staples (Closed)

         Six Pints Specialty Beer Company has Acquired Trou du diable

         Six Pints Specialty Beer Company Limited, a Canadian manufacturer of beer, has acquired Trou du               diable, a Canadian company that operates a microbrewery. No transaction terms were released.

Financials (Announced)

         Luminus Financial Services & Credit Union to Acquire Victory Community Credit Union

Luminus Financial Services & Credit Union Limited, a Canadian company that provides financial products and services, has agreed to acquire Victory Community Credit Union Limited, a Canadian credit union. No transaction terms were released.

Information Technology (Announced)

         Global Blockchain Technologies to Acquire Coinstream Mining

Global Blockchain Technologies Corp. (TSXV:BLOC), a Canadian investment company, has agreed to acquire Coinstream Mining Corp., a Canadian company that operates as a cryptocurrency mining company. Total transaction value is estimated to be $11.5 million.

         InVue Security Products to Acquire MicroSigns

InVue Security Products, Inc., an American company that provides sales enablement solutions for retailers and commercial businesses internationally, has agreed to acquire MicroSigns Inc., a Telesystem and ID Capital Management backed Canadian company that designs and manufactures wireless merchandising products for mobile device retailers. No transaction terms were released.

Information Technology (Closed)

         Anaca Technologies has Acquired CASCAID

Anaca Technologies Ltd., a Canadian company that develops career exploration and planning software, has acquired CASCAID Ltd., a U.K. operator of a careers information and guidance platform for the educational industry. No transaction terms were released.

VerticalScope has Acquired VarageSale

VerticalScope Inc., a Hedgewood and RDL Ventures backed Canadian operator of enthusiast websites and interest-based online communities, has acquired VarageSale, Inc., a Canadian company that operates a community-focused buy and sell website and mobile application. No transaction terms were released.

Digital Map Products has Acquired Mexico Business Directory

Digital Map Products, Inc., an American company that provides cloud-based location technology and data solutions has acquired Mexico Business Directory, a Canadian company that owns and operates a geocoded information database for business locations in Mexico. No transaction terms were released.

FRONTSTEPS has Acquired Everapps

FRONTSTEPS, a MCG Capital Corporation, CIP Capital and OFS Capital Management backed American company that develops software platforms for homeowner's associations (HOAs), builders, security and patrol experts, realtors, and homeowners, has acquired Everapps Inc., a Canadian company that operates an online management platform for condominium communities. No transaction terms were released.

Other (Announced)

          PetroTal to Acquire Gran Tierra Energy International

PetroTal Ltd., a Canadian company that acquires, operates, and grows producing oil and gas assets in Latin America, has agreed to acquire the Peru-based business of Gran Tierra Energy International, an oil and gas exploration and production company that is based in Curaçao. No transaction terms were released.

         Town of Collingwood to Acquire Collus Powerstream Corp

The Town of Collingwood has agreed to acquire the remaining fifty percent stake in Collus Powerstream Corp, a Canadian company that provides electrical services to the residents of Collingwood. Collus Powerstream is a subsidiary of Alectra Inc. No transaction terms were released.

Knowlton Development to Acquire Aromair Fine Fragrance Company

Knowlton Development Corporation, a Novacap, Caisse de dépôt et placement du Québec, Fondaction, Fonds de solidarité, EDC Equity and Investissement Québec backed Canadian company that operates as a contract manufacturer and custom formulator for the consumer goods industry, has agreed to acquire Aromair Fine Fragrance Company Inc., an American company that manufactures and supplies fine fragrance, home and air care products. Aromair Fine Fragrance is a subsidiary of the Aromair Group. No transaction terms were released.

Other (Closed)

          Genesus has Acquired PORC-EX France

Genesus Inc., a Canadian company that develops swine genetics, has acquired PORC-EX France, a distributor and promoter of swine genetics in France. No transaction terms were released.

Symantec has Acquired SurfEasy

Symantec Corporation (NasdaqGS:SYMC), an American company that, together with its subsidiaries, provides cybersecurity solutions worldwide, has acquired SurfEasy, Inc., a Canadian virtual private network (VPN) provider that delivers easy-to-use solutions for online privacy and security on smartphones, tablets and computers. SurfEasy was a subsidiary of Opera Software ASA (OB:OPERA). Total transaction value is estimated to be $49.1 million.

[i] Includes all M&A transactions in which either the target or buyer is a Canadian private company.