Value Unleashed

Market Updates

Equity and credit market conditions continue to indicate significant liquidity to underpin ongoing M&A activity.  Last week, mixed earnings releases caused a slight pullback in the U.S. equity market. However, the Canadian equity markets were buoyed by strengthening oil prices, nearly at US$50 per barrel.  Credit conditions remain robust, albeit with higher credit spreads than a year ago.

Valitas Insights: U.S. Lower-middle-market M&A activity surges in the first quarter

PitchBook released their first quarter update on U.S. mid-market private equity last week. According to the Pitchbook report, activity continued to face headwinds through the first quarter of 2016. However, the lower middle market (“LMM”) actually had an impressive first quarter.  The lower middle market is deals in the $25 to $100 million range.  Some of the most interesting charts from the Pitchbook report are shown below:

To view the full PitchBook report, click here.

Business Transitions Forum in Toronto on June 8: Maintaining Confidentiality During a Competitive Sale Process

As an event sponsor, Valitas invites you to take advantage of our 20% discount for Day 1, Day 2 or both days of the conference, using code BTFTSPOR1620.  This early bird offer expires on May 6^th.  Contact Paris Aden for more information.

Weekly Canadian Private Market M&A Report

Announced deals

OpenText to buy OEP-backed ANXeBusiness for $100 million

Canadian enterprise software company OpenText Corp. (Nasdaq: OTEX, TSX: OTC) has agreed to acquire ANXeBusiness Corp. of Southfield, Michigan, a provider of cloud-based information exchange services to the U.S. automotive and healthcare industries. The deal is valued at about US$100 million and is expected to close later this year. Complementing OpenText’s existing B2B integration solutions, ANX is expected to strengthen OpenText’s industry presence and reach in the Automotive and Healthcare industries through strong customer relationships and targeted business partner collaboration solutions.

OMERS Private Equity to sell Give & Go to Thomas H. Lee

OMERS Private Equity (OPE) has agreed to sell Give and Go Prepared Foods Corp. (Give & Go) to Thomas H. Lee Partners, a U.S. private equity firm. No financial terms were released; however, Reuters recently reported that Thomas H. Lee was close to acquiring Give & Go for a sum approaching US$800 million. Michael Graham, Head of North America, for OPE said, “Today’s announcement marks another successful realization in the OPE portfolio – the seventh exit in the last three years. Give & Go has performed very well as an investment for OMERS returning approximately 3X our original investment. We sincerely wish Joel and his entire team continued success.”

sells Hotelbeds unit to Cinven, CPPIB for $1.35 billion

European tourism group TUI (TUIT.L) has agreed a deal to sell its Hotelbeds unit to private equity group Cinven and Canada Pension Plan Investment Board for 1.191 billion euros (US$1.35 billion) in cash, it said on Thursday. Hotelbeds is the largest business globally of its kind with a market share of six percent. Headquartered in Palma de Mallorca, Spain, it reported turnover of €1.06 billion and underlying EBITDA of €69 million in the year to end of September 2015. “We’re going to be focused heavily on building out that Asian growth, where travel growth is really booming,” said Chris Good, Senior Principal at Cinven. “There are plenty of opportunities to expand outside bed banks, into rental cars and ticketing as well.”

Urban Select to acquire majority stake in Luxy Easy Travel

Urban Select Capital Corp. has agreed to acquire a 51 percent interest in Luxy Easy Travel Ltd., a Vancouver-based marketplace for members to discover vacation homes, theme tours and customized travel services. Urban Select will acquire the stake in exchange for $100,000 and company shares valued at $665,000. Based in Vancouver, Urban Select is a provider of growth capital to private and public companies in a range of industries.

Closed Deals

Birch Hill Equity Partners acquires Cannon Hygiene Canada

Canadian private equity firm Birch Hill Equity Partners recently acquired Cannon Hygiene Canada in partnership with Peter Farrell, the company’s president and CEO. No financial terms were disclosed. President and CEO of Cannon Canada, Peter Farrell, said, “Our long term growth plan is to become the leading service provider for hygiene and pest control in Canada, and with Birch Hill as our financial partner, we are confident we can accelerate this plan.” David Samuel, a Partner at Birch Hill commented on the deal, “Partnering with Peter and his team is an appealing opportunity to invest in a platform that is poised for growth, as every ‘away from home’ business is a potential customer.”

closes Softgate buy with funding from Silicon Valley Bank

TIO Networks Corp. (TSX-V: TNC) has closed its buy of Softgate Systems Inc., a Fairfield, New Jersey-based provider of consumer retail bill payment solutions. The previously-announced deal is valued at about US$31 million. Based in Vancouver, TIO is a cloud-based bill payment processor. It said the Softgate deal creates North America’s largest provider of walk-in bill payment services with a pro-forma revenue run-rate of over $105 million. Hamed Shahbazi, CEO of TIO Networks said, “The acquisition of Softgate provides a unique opportunity for TIO to scale its business substantially and represents an important corporate milestone as we continue to grow and evolve to meet the needs of our customers. We expect to be able to expand and extend services towards our customer base across North America, with a strong focus on servicing the underbanked and unbanked population.”