Canadian Private Market Recap: Aug 5

  • Posted By: Louis Goldberg, Miranda Li and Paris Aden

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Market Update

The S&P 500 closed this week at a new record high, with average TEV/EBITDA multiple for the index closing near a record high as well. The Russell 2000 composite and TSX composites also closed at twelve month highs, while volatility was remarkably low as evidenced by the VIX nearing ten-year lows.

10-year treasury yields continue to creep down, approaching all-time lows. New credit issuances remain very soft, with less than three syndicated deals were observed last week.

Canadian M&A activity seems to have stabilized, despite a significant slowdown in U.S. M&A activity in terms of total deal count compared to one year ago, particularly in the U.S., as acquirers have become increasingly selective in deal making in response to decreasing deal quality. Most of the high quality companies went to market during the robust 2014 and 2015 periods. Average deal sizes in Canada and the U.S. diverged when compared to the prior year period, as Canadian dollar volume fell significantly.

Valitas Insights: Canadian Private Company Industry Composition

There are over 8,000 private companies with 25 or more employees headquartered in Canada. 996 of these are publicly-listed and 7,483 of these are private. In the table below, we have segmented the total number of companies by industry and shown the company count by number of employees.  

While the Canadian economy is clearly heavily focused on resource extraction industries, it is striking how many companies are operating in high value services and innovation industries.  We will take a closer look at the Canadian company landscape over the next few weeks, including a discussion of fragmentation, the extent that economies of scale are present in each industry and relative consolidation potential of each of these industries.

Weekly Canadian Private Market M&A Report

Announced Deals

Griffin Skye to Acquire Associated National Brokerage

Griffin Skye Corporation, a Canadian company that provides exposure to a diversified portfolio of commercial real estate mortgages and loans, has agreed to acquire Associated National Brokerage Inc., a Canadian company that offers over-the-counter retail distribution services for health and beauty products. The total transaction value of the deal is estimated to be $26 million.

Anthem Sports & Entertainment to Acquire The GameTV

Anthem Sports & Entertainment Corporation, a Canadian company that owns and operates specialty television channels on linear, digital, and mobile platforms, has agreed to acquire The GameTV Corporation, a Canadian operator of a television network that provides viewers a chance to win prizes. No terms of the transaction were released.

Pacific Therapeutics to Acquire Tower Three Wireless

Pacific Therapeutics Limited, a Canada-based pharmaceutical company that focuses on developing herbal supplements, has agreed to acquire Tower Three Wireless SAS, a Colombian company that builds cellular network infrastructure sites. The total transaction value of the deal is estimated to be $2.2 million.

Mosaic Capital to Acquire Mackow Industries

Mosaic Capital Corporation (TSXV: M), a Canadian principal investment company, has agreed to acquire Mackow Industries Limited, a Canadian manufacturer of precision fabricated metal components. The total transaction value of the deal is estimated to be $29.5 million.

Irving Oil to Acquire Phillips 66 Whitegate Refinery

Irving Oil Limited, a Canadian company that engages in energy processing, transporting, and marketing, has agreed to acquire Phillips 66 Whitegate Refinery Limited, an Ireland-based business that refines and processes crude petroleum oil and products. No terms of the transaction were released.

GMP Capital to Acquire FirstEnergy Capital

GMP Capital Inc. (TSX: GMP), an independent diversified financial services company, has agreed to acquire FirstEnergy Capital Corporation, a Canadian energy specialist investment bank. The total transaction value is expected to be $166 million.

Strongco to Acquire Chadwick-Baross

Strongco Corporation, an ISH Capital backed company that operates as major multiline mobile equipment dealer with operations across Canada and in the United States, has agreed to acquire Chadwick-Baross, Inc., a U.S. company that distributes heavy equipment. The total transaction value is expected to be $16.6 million.

Coro Mining to Acquire Minera Rayrock

Coro Mining Corporation (TSX: COP), a business that engages in the acquisition, exploration, and exploitation of mineral properties and projects located in Chile, has agreed to acquire Minera Rayrock Ltda., a Chile-based mining company. The total transaction value of the deal is estimated to be $8.5 million.

Closed Deals

DAK Americas Acquires Selenis Canada

DAK Americas LLC, a manufacturer and supplier of polyethylene terephthalate resins (PET), polyesters staple fibers, monomers/ingredients, and specialty polymers for customers in the United States and internationally, has acquired Selenis Canada Inc., a producer and supplier of PET solutions for customers in Canada and the northern United States. No terms of the transaction were released.

Canadian Energy Services & Technology Acquires Catalyst Oilfield Services

Canadian Energy Services & Technology Corporation (TSX: CEU), a provider of consumable chemical solutions throughout the life-cycle of the oilfield, has acquired Catalyst Oilfield Services LLC, a U.S. independent oilfield chemical company that manufactures and distributes chemicals for production, drilling, pipeline, and stimulation operations. No terms of the transaction were released.

Wind Point Partners and Ontario Teachers' Pension Plan Acquire Aurora Plastics

Wind Point Partners, a U.S. private equity and venture capital firm, and Ontario Teachers Pension Plan have acquired Aurora Plastics, Inc., a company that engages in the production and sale of custom blended polyvinyl chloride (PVC) pellets, rigid and foam PVC powder compounds, and custom profile extruder. No terms of the transaction were released.

Pro Mach Acquires Zarpac

Pro Mach, Incorporated, a AEA Investors backed U.S. company that designs and manufactures packaging and processing machinery for food, beverage, consumer goods, pharmaceutical, and other consumer and industrial companies, has acquired Zarpac, Inc., a packaging technology company that provides system integration, data acquisition software, and custom design build solutions. No terms of the transaction were released.

Specified Air Solutions Acquires Dectron Internationale

Specified Air Solutions, a Sterling Group backed U.S. based business that designs and manufactures specialty commercial and industrial HVAC equipment, as well as industrial process and finishing equipment, has acquired Dectron Internationale Inc., a Canadian company that manufactures and markets engineered custom and semi-custom indoor air quality and heating, ventilation, and air conditioning (HVAC) products and services through its subsidiaries for residential, commercial, institutional, and industrial applications worldwide. No terms of the transaction were released.

Shred-Tech Acquires AXO Shredders UK

Shred-Tech Inc., a Canadian company that engages in the design and manufacture of reduction systems and shredding machinery for waste reduction and recycling needs, has acquired AXO Shredders UK Limited, a company that manufactures shredding machines, shred-trucks, biomass shredders, and modular systems. No terms of the transaction were released.

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