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Canadian Private Market Recap: May 11

  • Posted By: Ari Cuperfain

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  • Comments: 1

Last week’s activity in the Canadian private market was quieter than it has been of late. Several transactions closed last week, but there were few announced deals of note. Private equity firms – both in Canada and abroad – continued to drive acquisition activity within the Canadian private market. Here are the major deals for the week.

M&A

Valmar Airflo Acquired by The Salford Group

Valmar Airflo Inc. was acquired last week by The Salford Group Inc. The financial terms of the transaction were not disclosed. Valmar Airflo, headquartered in Elie, MB, is a leading manufacturer of seeding and granular application equipment for the agricultural industry. Similarly, Salford is a manufacturer of equipment used for agriculture applications, including tillage, seeding and fertilizer. About the deal, Geof Gray, CEO of Salford said, “We are thrilled to add Valmar to our family. This merger will allow us to offer a complete line of high quality seeding and granular application equipment to the grower and service provider.” The Salford Group is a portfolio company of U.S. private equity firm GenNx360 Capital Partners and Valmar Airflo is Sanford’s second acquisition since GenNx360 acquired it in 2013.

Canadian Gold Producers Crocodile and Newmarket Announce $190 Million Merger

Crocodile Gold Corp (TSX: CRK) of Toronto, ON and Newmarket Gold Inc. (TSX-V: NGN) of Vancouver, BC have announced their upcoming merger. The merger will create a new gold industry consolidator focused on acquiring high quality gold assets. The transaction will be valued at about $190 million, and the hope is that more acquisitions will follow. Crocodile is an established company controlling three operating mines in Australia, while Newmarket was formed by seasoned executives focused on facilitating strategic acquisitions. Newmarket CEO Doug Forster plans to reach production rates of 400,000 ounces per year, roughly double Crocodile’s current production levels, although he did not provide a timeline for this milestone. Following the transaction, the company will be renamed Newmarket Gold Inc.

Acquisition of Kissner by Metalmark-led Consortium Closes

Kissner Milling Company Ltd., owned by private equity firm TorQuest Partners, closed its previously announced sale to a consortium of investors led by Metalmark Capital. Kissner produces and distributes salt and specialty ice-melting products, and it is headquartered in Cambridge, ON. Metalmark is based in New York, and this transaction signifies the increasing appetite among U.S. private equity firms for Canadian businesses. According to TorQuest, the sale represents an approximately 4x return on invested capital from when it acquired Kissner in November 2013.

Financing

GDI Completes Financing Arrangement and Public Offering

GDI Integrated Facility Services Inc. completed its previously announced going-public merger with Medwell Capital Corp (TSX-V: MWC) on Thursday. The merged company also closed a public offering valued at $150.4 million. Based in Montreal, QC, GDI offers janitorial services including commercial cleaning services and other related mechanical and maintenance services. GDI has a strong client base in Canada and a growing cohort of clients in the United States. Medwell is a publicly listed investment and advisory firm based in Edmonton, AB. Both Medwell and GDI are portfolio companies of Birch Hill Equity Partners. The newly formed company began trading on the TSX on May 14 under the symbol GDI.

Largo Resources to Receive Financing from Private Equity Firm Arias

Largo Resources Ltd. (TSX-V: LGO) has announced it will be receiving financing of $70 million, most of which is expected to come from U.S. private equity firm Arias Resource Capital Management. The $70 million value was raised from the previously anticipated $50 million due to increased demand from existing investors, including Arias. Largo is a mineral company based in Toronto, ON, and is focused primarily on producing high-grade vanadium mined from its Maracás Menchen Mine in Brazil. Largo also conducts mining projects at locations within Canada.

Clairvest to Acquire Additional Shares of Discovery Air

Canadian private equity firm Clairvest Group Inc. announced its intention to buy additional shares in Discovery Air Inc. (TSX: DA). Based in Etobicoke, ON, Discovery Air operates over 160 aircrafts, and provides aviation and logistics services as well as airborne training to first-responders, helicopter, military and other flight personnel. Clairvest (and its affiliates) currently own about 75% of issued and outstanding common shares, and may increase their ownership up to roughly 83% as a result of the financing.

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