Value Unleashed

Market Update

The North American equity markets continued their recovery, with their second consecutive week of gains. Plans for further stimulus from the European Central Bank and the Bank of Japan helped calm the markets. The negative impact of oil prices on the equity markets is beginning to show less of an impact. On the other hand, the stimulative effect of lower oil prices is beginning to manifest itself in the broader economy. While credit markets remain healthy for mid-market transactions, the appetite for credit risk in the top tier of the market seems to be moderating. The largest leveraged buyout announced last year, Carlyle Group LP’s purchase of Symantec Corp.’s Veritas data-storage unit required a significant revision of financing terms due to weaker high yield bond markets. The revised agreement increased the equity portion of the deal to 40 percent from 33 percent, and reduced leverage to 5.8 times EBITDA from 6.7 times EBITDA.

In a broader cyclical context, the U.S. equity indices remain close to their 10-year highs due to the strength of the U.S. economy. However, the weakness of the TSX is disguised by the weakness of the Canadian dollar. When an apples-to-apples comparison is made with the U.S. indices (on a common currency basis), the TSX reflects fundamental weakness in the Canadian markets, which on a U.S. dollar basis are near levels not seen since the financial crisis of 2008-09.

Weekly Canadian Private Market M&A Report

Announced Deals

Lightyear Capital and PSP Investments to buy AIG Advisor Group

Juniper Networks to acquire venture-backed BTI Systems

PE-backed Primus Canada to be bought by Birch Communications

Hydro One to buy Brookfield’s power transmission unit for $222 million

Investors back INTEGA’s buy of Valeant Groupe Cosméderme

Cerberus-backed Keane to buy Trican’s U.S. assets in $247 million deal

Closed Deals

Compass-owned Sterno acquires Northern International for $50 million

AppDirect acquires TA Associates-backed Radialpoint

Windjammer-backed CHG buys Specialty Food Service Hardware

VC-backed ScribbleLive buys content creation provider Visually
Brookfield closes $1.99 billion acquisition of Colombia’s Isagen

Announced Deals

Lightyear Capital and PSP Investments to buy AIG Advisor Group

Lightyear Capital and Public Section Pension Investment Board (“PSP”) have agreed to acquire AIG Advisor Group Inc., a subsidiary of American International Group. No financial terms were disclosed. Mark Vassallo, Managing Partner of Lightyear, said: "We see enormous opportunity to grow and expand Advisor Group, and we look forward to working with Valerie Brown and Erica McGinnis, the Advisor Group management team, the PSP Investments team, and the Advisor Group’s high-quality advisor force to grow the company."

Juniper Networks to acquire venture-backed BTI Systems

Juniper Networks, a California networking equipment maker, has agreed to purchase BTI Systems Inc., an Ottawa-based provider of cloud and metro services. No financial terms were released. The acquisition will allow Juniper to accelerate the delivery of open and automated packet optical transport solutions. Jonathan Davidson, executive Vice President and general manager of Juniper, said: "We expect the acquisition will allow Juniper to accelerate the delivery of open and automated packet optical transport solutions that integrate with our NorthStar Controller and include network management features that enable end-to-end provisioning of new services."

PE-backed Primus Canada to be bought by Birch Communications

Primus Telecommunications Canada Inc. has agreed to be acquired by Birch Communications Inc., a U.S.-based provider of IP-based communications, broadband, cloud and IT services. No financial terms were disclosed. In a press release, Primus has stated: "We’re excited about the combined company which will provide a broader array of services at prices designed to best serve Primus customers and we’ll continue to offer a strong competitive choice in the marketplace."

Hydro One to buy Brookfield’s power transmission unit for $222 million

Hydro One Ltd. (TSX: H) has agreed to acquire Great Lakes Power Transmission LP, a regulated electricity transmission business operating in Ontario. Hydro One agreed to pay $222 million to current owner, Brookfield Infrastructure. Mayo Schmidt, President and CEO of Hydro One Limited, said: "Our intense focus on customers and communities together with our disciplined approach to leveraging strategic opportunities is an important combination as we move forward with the transformation of this company."

Investors back INTEGA’s buy of Valeant Groupe Cosméderme

INTEGA Skin Sciences Inc., a Montréal-based dermatology specialist, has agreed to buy Valeant Groupe Cosméderme. No financial terms were disclosed. Jacques Dessureault, President and General Manager of Valeant Canada, said: "This strategic agreement is allowing us to strengthen our focus on our dermatological platform for Canadian Dermatologists, including our specialty prescription products, Solta and Obagi."

Cerberus-backed Keane to buy Trican’s U.S. assets in $247 million deal

Keane Group, a portfolio company of Cerberus Capital Management, has agreed to buy the majority of U.S. pumping assets belonging to Trican Well Service Ltd. (TSX: TCW), a Calgary-based oilfield services provider. The purchase has a total cost of US$247 million. The acquisition will enable Keane Group to provide cost-effective completion services that will maximize the return on customers’ assets in the current low commodity price environment. Regarding the deal, James Stewart, Keane Group Chairman and CEO, said: "With our expanded capabilities, Keane Group will have significantly greater scale that will enable us to provide all customers cost-effective completion services that will maximize the return on their assets in the current low commodity price environment."

Closed Deals

Compass-owned Sterno acquires Northern International for $50 million

Sterno Products LLC has acquired Northern International Inc., a provider of flameless candles and outdoor lighting products for the retail segment. Sterno paid $50 million for the company and a $2.5 million earn-out payable over two years. The transaction would enhance Stern Products’ current position in the foodservices lighting segment. Commenting on the transaction, Alan Offenberg, CEO of CODI (NYSE: CODI) of which Sterno is a subsidiary, has said: "Going forward, we will continue to pursue opportunities to grow our subsidiaries by making attractive add-on acquisitions as well as platform acquisitions that create long-term shareholder value."

AppDirect acquires TA Associates-backed Radialpoint

Canadian tech support provider Radialpoint has been acquired by San Francisco-based AppDirect. The acquisition value was not disclosed. Through this transaction, AppDirect is able to expand the number of its paid business users significantly. AppDirect's president and Co-CEO, Daniel Saks, said: "AppDirect is focused on making it easier for enterprises to find, buy and manage cloud services...we recognized that the human element is critical to this process and that customers need real people to help them get the most out of those services."

Windjammer-backed CHG buys Specialty Food Service Hardware

Specialty Food Service Hardware Inc. and sister company Vision Parts & Hardware Inc. has been acquired by Component Hardware Group Inc., a portfolio company of Windjammer Capital Investors. No financial terms were disclosed. This acquisition would further strengthen CHG’s position in in the foodservice hardware and commercial plumbing markets. Harry Franze, President & CEO of CHG, commented, "it was apparent from the start of our discussions that the business Harold and his team built would provide a great growth platform for Component Hardware Group in one of our key markets."

VC-backed ScribbleLive buys content creation provider Visually

Canadian digital content marketing provider ScribbleLive Inchas bought Visually Inc., a San Francisco-based content creation platform that helps businesses to connect with audiences. No financial terms were released. Vince Mifsud, CEO of ScribbleLive, said, “As more consumers opt to engage with brands via content versus interruptive ads, it makes sense for us to bring Visually on board. The company has a solid track record for creating premium content for more than 1,000 top brands including 40 of the Fortune 100. With this acquisition, we can continue to transform marketing by marrying data science and creativity. And while our customers are able to gain powerful insights with ScribbleLive today, they can now put this data to even greater use by leveraging it to inform the type of content they create, resulting in strong content that resonates with their audience and cuts through the noise, while continuing to measure results for future content creation. It’s a virtuous circle.”

Brookfield closes $1.99 billion acquisition of Colombia’s Isagen

Brookfield Renewable Energy Partners LP has acquired 57.6 percent stake in Isagen SA, which owns and operates a renewable energy portfolio consisting of 3,032 MW of principally hydroelectric generating capacity and a 3,800 MW development portfolio in Colombia. The transaction is valued at US$1.99 billion. Sachin Shah, president of Brookfield Renewable Energy Partners, has stated in the previous announcement, “We are extremely pleased to grow our business in Colombia, an attractive market with strong long-term growth fundamentals, a highly skilled labor force and continued need for new investment.”