Value Unleashed

Market Update

Anticipation of a Fed rate hike before the end of the year and retail sector weakness have had a negative impact on the North American equity markets. Last week the S&P 500 and the TSX Composite declined by 3.6% and 3.5% respectively. The fear index jumped 40 percent from last week. The latest reported inflation number, 1.9%, and the strong October employment numbers are pointing to a likely Fed rate hike in December.  The factors also impacted credit markets as spreads increased.    

   Source: Capital IQ.

Weekly Canadian Private M&A Report

§  Brazil’s OAS sells Invepar stake to Brookfield: Reuters

§  Angel-backed ATD buys British telehealth services provider

§  GDI closes acquisition of Ainsworth

§  Nautic Partners’ IPS acquires assets of Schwartz Chemical

§  Shoes.com buys U.S. accessories brand

§  Protecode acquired by Synopsys

§  Clairvest exits investment in textile rental business Linen King

§  New Flyer Acquires Motor Coach Industries

Brazil’s OAS sells Invepar stake to Brookfield

OAS Investimentos S.A., the investment arm of OAS S.A., a Brazilian civil engineering and construction services firm, sells a 24.4 percent stake in its subsidiary, Invepar, to Brookfield Asset Management for 1.35 billion reais.  The deal would allow Grupo OAS, the parent of OAS S.A. to restructure 8 billion reais in debt while under bankruptcy protection. Grupo OAS petitioned for bankruptcy protection after struggling with the impact of general economic downturn and the corruption scandal at one of its subsidiaries. Under the deal, Brookfield Asset Management is to forego the plan to extend OAS as a debtor-in-possession loan worth 800 million reais. 

ATD buys British Telehealth Services Provider

ATD Health Network Inc., a Toronto based company and owner of the Ask The Doctor platform has purchased London, U.K. based Patients Connected Ltd. The financial terms of the transaction were not released. ATD has over 500,000 global subscribers and has over 35,000 doctors. President and CEO of ATD, Prakash Chand said, “We are excited to announce our second acquisition and welcome Patients Connected to the Ask The Doctor family. With NHS in a financial crisis and wait times at all UK hospitals and clinics increasing to over 5 hours to see exhausted physicians, the timing couldn’t have been better for us to integrate our Ask The Doctor platform with Patients Connected.”

GDI closes acquisition of Ainsworth

GDI Integrated Facility Services, a platform company of Birch Hill Equity Partners, has acquired Ainsworth Inc. for $20.5 million. Ainsworth, a subsidiary of CEDA International Corp. provides technical building maintenance services to clients across Canada.  The President and CEO of GDI, Claude Bigras stated, “Uniting GDI’s leading cross-Canada commercial janitorial services platform with Ainsworth’s cross-Canada HVAC-R, mechanical, electrical and technical services business positions GDI as the only company in Canada capable of providing building owners and managers with a full range of core facility maintenance services. Together with Ainsworth, we are now able to offer our clients a complete suite of best in class outsourced services, a one-stop-shop for all of their facility maintenance needs.”

Nautic Partners’ IPS acquires assets of Schwartz Chemical

Nautic Partners, a U.S. based private equity firm, acquired the ‘solvent cement’ assets of Schwartz Chemical Corp, a Canadian company. Financial terms of the transaction were not released. Schwartz Chemical Corp provides solvent cement, primers and cleaners used in plumbing projects. The acquisition will be folded into IPS Corporation, a portfolio company of Nautic Partners. IPS Corporation aims to be a one stop shop for the Canadian Plumbing and HVAC industries.

Shoes.com buys U.S. accessories brand

Shoes.com, a portfolio company of Hardy Capital Partners, has acquired Richer Poorer, a clothing accessories provider. Financial terms of the transaction were not released. Richer Poorer brought innovative, affordable and stylish socks to the market; which has seen a U.S. growth rate of 14 percent in 2014. Roger Hardy, the CEO of Shoes.com said, “Not only is this acquisition a natural extension of our business but it demonstrates our commitment to expanding our offering into the accessories and apparel categories. Socks have transformed from commodity to fashion statement — this is reflected in the growth of the category and represents an exciting opportunity for us to diversify our product assortment beyond footwear.” Iva Pawling, the co-founder and CEO of Richer Poorer added, “We’ve been acutely focused on building a strong brand identity, authentic voice and quality product since we launched five years ago. The next growth phase for Richer Poorer requires significant resources, e-commerce expertise and ability to scale, all of which the Shoes.com team brings to the table.

Protecode acquired by Synopsys

Protecode, a portfolio company of Brightspark Ventures, was acquired by Synopsys. Financial terms of the transaction were not released. Prototec Inc., a Canadian company, provides a solution to detect and manage open source software licensing and security. This acquisition extends the capability of Synopsys’ software quality and security platform. Andreas Kuehlmann, SVP and GM of Synopsis said, “Understanding software dependencies and their license obligations have been and will continue to be an important part of developing software. By combining Protecode technology with our current SCA solution that focuses on mitigating security vulnerabilities, Synopsys has a comprehensive offering that addresses the gamut of risk across the software supply chain.”

Clairvest exits investment in textile rental business Linen King

Clairvest Group sold its portfolio company Linen King LLC, a U.S. rental business that provides commercial laundry services to healthcare and hospitality industries. In 2011, Clairvest invested $8.6 million in Linen King. No other financial terms or counterparty to the transaction was released. The sale of Linen King is the latest in a series of exists by Clairvest Group.

New Flyer Acquires Motor Coach Industries

New Flyer Industries Inc. has acquired Motor Coach Industries International from KPS Capital Partners, a U.S. private equity firm. New Flyer agreed to purchase Motor Coach for US$455 million in cash. The transaction will be funded through a new credit facility consisting of a $482 million term loan and a $343 million revolver (for a total of $825 million).  Paul Soubry, New Flyer’s President and CEO commented, “We are thrilled to combine North America’s #1 brand in heavy duty-transit buses with North America’s #1 brand in motor coaches. We are very proud of our track record that focuses on employee engagement, customer satisfaction and shareholder value. We intend to build on this success with the addition of MCI and view this complementary business as an important step forward to diversification and growth in areas where we can leverage our OpEx, sourcing, manufacturing, parts distribution and service expertise.” The transaction is expected to be accretive to New Flyer before realizing synergies. New Flyer expects to realize annual synergies of $10 million by reduction in corporate costs, Operating expenses and sourcing expenses.