Renatus’ Weekly M&A Newsletter – 23/02/2020
February 23, 2020Renatus’ Weekly M&A Newsletter – 15/03/2020
March 15, 2020
Renatus Weekly M&A & Company Performance Newsletter 01/03/2020
Dear Reader,
You are receiving this mail every week as we see you as a key partner and we look forward to continuing to enjoy our journey with you over the decades ahead.
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
M&A ACTIVITY
Easons acquires Dubray Books
Deal Details: Ireland’s oldest book retailer Easons has acquired rival Dubray Books for an undisclosed sum.
Corporate finance sources speculate that Dubray probably traded at between 5x – 6x its EBITDA.
Dubray Books, founded in Bray in 1973 by Helen Clear, comprises 8 stores across the greater Dublin area and Galway. It employs about 90 people, with annual sales of over €9m and generates operating profits of approximately €700K.
Easons, founded in 1866, is Ireland’s oldest and largest book retailer with over 60 outlets nationwide.
Having originally being founded in 1819, Ireland’s oldest book shop has lived through some of the most exciting times in Irish history and has grown to become Ireland’s biggest book supplier. The company has more than 60 outlets in both Ireland and Northern Ireland, with its flagship store on O’Connell Street, and this acquisition will further its presence on the ground in Ireland.
Following the acquisition, Dubray will retain as a separate brand with its retail outlets in their current format.
Advisers: Dubray was advised by Gerard Heffernan, Heffernan Financial Advisory, and McCann Fitzgerald Solicitors.
RSM Ireland provided transaction services support to Dubray.
Eason received financial and tax advice from BDO in respect of the transaction and legal advice from Orpen Franks Solicitors.
Renatus Comment: Eason’s latest filings show that the for the year ended Jan 2019, revenue for the company was c. €105.6m with an operating profit of c. €2.6m.
With a shift to digital media and mass amazon procurement of paper media, it is clearly a sector that has challenges but the market leader is proving robust and while Easons may be ex growth at best, they are likely to remain profitable in the long-run.
Source: Independent Business
CRH offloads stake in Indian joint venture
Deal Details: CRH announced the sale of its 50% interest in My Home Industries for around €300m.
CRH had acquired its Indian holding in 2008 for a total investment value of €290m.
The sale brings total proceeds from asset sales including the sale of its European distribution business to €2.1bn for the year.
The building materials giants reported earnings were up 25% last year to a record €4.2bn.
Advisers: None mentioned
Renatus Comment: Formed through a merger in 1970 between Cement Limited and Roadstone Limited, CRH is a brilliant Irish case study on how a well planned and executed acquisition strategy can really augment growth and propel a company to be an industry leader on a global scale. At the time of the merger in 1970, the group had c. €27m in sales whereas today it has over €28bn in sales and €4.2bn in EBITDA. Between 2016 and 2019 alone CRH completed a staggering 166 acquisitions and during the 2000’s it averaged 52 acquisitions per annum, equivalent to roughly one acquisition per week.
Source: Irish Times
500 AIB ATMs acquired by Brinks
Deal Details: AIB sold hundreds of ATM machines to American cash management company Brinks ATM Services Limited, an Irish subsidiary of the Nasdaq listed The Brink’s Company, for an undisclosed sum.
Brinks is the world’s largest cash management company with 62,400 employees worldwide and customers in over 100 countries.
The deal includes an agreement that there will be no additional charges or fees for people using debit and ATM cards issued in this country.
There is also a commitment to retain the ATMs sold.
Advisers: Brinks was advised by the LK Shields team led by Gerry Halpenny with assistance from Paul Dineen, Clair Cassidy, Cathal Hester and Alice Pelissier. The group was advised by AIB Corporate Finance.
Renatus Comment: Brink’s acquisition of these ATMs is part of a wider disposal of ATMs by Ireland’s large banks. It’s previously been reported that Bank of Ireland is selling off a network of 700 ATMs while Ulster Bank has already sold a network of 400 ATMs to Euronet. Combined, these portfolios of ATMs make up over 40% of the estimated 3,750 ATMs in Ireland.
Source: Independent Business
Two Co Antrim law firms announce a merger
Deal Details: Anderson Agnew & Co in Ballymena will now incorporate T.S McAllister & Son.
William McCurdy and Brendan Maguire of McAllisters are now consultants in the new firm, joining their colleagues Mr. Donnelly – a former President of the Law Society of Northern Ireland – Damien Agnew and Peter Henry.
Advisers: None mentioned
Source: Belfast Telegraph
Accuris Networks acquired by ZephyrTel
Deal Details: Accuris Networks has been acquired by ZephyrTel as part of a roll-up of telecoms software companies for an undisclosed sum.
Accuris Networks is a Dublin software company that helps service providers monetise the connectivity between networks. Accuris was originally owned by EIR but was bought by Larry Quinn and Gilbert Little in 2014.
ZephyrTel is a Texas-based software company that is serving the telecommunications industry worldwide with software products for retail, infrastructure, mobile, cloud and customer experience. The company was set up in 2018 and reported revenue of $70m (€63.5m).
Advisers: None mentioned
Source: Sunday Times
Highfield Energy enters into JV with Temporis Aurora Fund
Deal Details: Highfield Energy has entered into a wind power JV with Temporis Aurora Fund to deliver 200MW of energy with the investment expected to be around €300m.
Highfield Energy is an Irish developer of renewable energy projects that was established in 2014. The company currently has over 1GW of utility-scale wind, solar photovoltaic (PV) and energy storage projects in its portfolio.
Temporis Investment Management is a specialist investment manager that invests across asset classes that they believe to be the best ideas in renewable energy and clean technology. Temporis has bases in both Cork and London, and manages approximately $600m worth of assets as of November last year. The Aurora Fund is backed by the Ireland Strategic Investment Fund (ISIF) and AIB, as well as institutional investors in the US, UK, Denmark and Germany.
Advisers: None mentioned
Source: Sunday Independent
Deal Updates
Key Waste deal nearly in doubt with Sinn Fein surge
The sale of Key Waste suffered “a wobble” in recent weeks following Sinn Fein’s strong performance in the general election. Sinn Fein’s “commitment to put waste collection back under the control of local authorities” is sure to have rocked potential bidders.
However, the Sale of Key Waste is expected to proceed and could fetch c. €50m. Bids were due to be lodged by last Friday.
Source: Sunday Times
EXECUTIVE AND BOARD APPOINTMENTS
We in Renatus believe that more important than the deals are the people and we have teamed up with leaders in this field Korn Ferry to provide you with details of key recent executive and board level appointments.
Musgrave appoints new Chief Supply Chain Officer
Cork headquartered Musgrave Group has appointed Luke Hanlon as its new Chief Supply Chain Officer. Mr Hanlon joined Musgrave in 2003 from Kerry Group. He has held a number of senior roles in the group since joining including Supply Chain Director, HR Director and Export Director. Mr Hanlon’s new appointment sees him coincides with his accession to group executive board.
Tully Rinckey appoints new Managing Partner
Tully Rinckey Ireland has appointed Gráinne Loughnane as its new Managing Partner. Ms Loughnane joined the practice in early 2019 and oversees the firm’s commercial property practice. She previously worked at Walkers and McDowell Purcell.
Phorest appoints new Chief Marketing Officer
Salon software firm, Phorest, has appointed Sylvie McDermott as its Chief Marketing Officer. Ms McDermott is a former senior executive at CurrencyFair where she worked at its Chief Commercial Officer and previously as Chief Product & Technology Officer. She worked for Betfair prior to CurrencyFair as Group Product Director. Her earlier career comprised periods at Paddy Power, Digicel and Vodafone
DWF appoints new Director
Global legal business DWF has announced the appointment of David McNeice as head of its construction and infrastructure team in Northern Ireland. Mr McNeice was promoted to director in a round of recent appointments at the firm. He is an experienced construction lawyer and will work across Britain and Ireland on behalf of contractors, engineers and public sector clients.
Philip Lee Law appoints new Real Estate Partner
Thomas O’Malley has been appointed as Real Estate Partner at Philip Lee. Mr O’Malley previously worked as a Partner at McDowell Purcell for 14 years, also in the capacity of Real Estate Partner. Mr O’Malley specialises in commercial real estate and focuses on social housing and property development.
COMPANY PERFORMANCE
EBITDA is an accounting term and is often the best indicator of profitability in non-capital-intensive businesses before financing and tax are considered. In capital-intensive businesses EBIT or EBITDA less average Capital Expenditure are often better measures. YoY is an acronym for the year-on-year movement in turnover, EBITDA, etc.
Based in Dundalk, Co. Louth, D G McArdle International Limited is a specialist provider of Transport & Logistics services throughout Ireland, the UK and Europe. The company has been in business for over 25 years and has c. 115 clients worldwide and c. 130 owned vehicles. The business has a strong year which saw revenue increase by 26.2% to c. €19.2m while EBITDA also increased by a massive 56.4% to c. €2.3m. The jump in EBITDA is down to an increase in gross profit margins, due to well managed cost of sales, as well as the minor increase in admin expenses against the large increase in turnover. Average staff numbers for the year increased by 11 employees, largely down to new drivers, which increased the wage bill to c. €2.8m from c. €2.4m the previous year. Cash increased during the year by c. €650k after a c. €1.1m purchase of tangible assets as well as a c. €530k debt repayment during the year. Cash in hand on the balance sheet stood at c. €245k although the business had an invoice finance facility which stood a c. €1.3m leaving a negative net cash balance of c. €1.0m. Net assets were up by 42.6% to c. €3.8m. The company is owned by Marie McArdle (50%), David McArdle (25%) and Grainne McArdle (25%).
Michael Smith Supermarkets Limited, which trades as Supervalu Monksland, is based in Athlone. In FY19, the company saw revenue increase marginally by 1.5% to c. €13.4 while EBITDA also increased by 5.8% to c. €1.2m. The company employed an average of 71 people during the year at a cost of c. €1.5m. The company had a net cash increase in FY19 of c. €265k after a capex spend of c. €120k as well as a debt repayment of c. €865k. Cash on the balance sheet stood at c. €2m against a debt balance of c. €1.3m. Net assets increased during the year by 21.1% to c. €4.9m. The company is owned by Michael Smith 100% and Catherine Smith 1%.
Laydex Limited, which trades as Laydex Building Solutions, is a seller and distributor of construction materials and building products into the Construction industry in Ireland. FY19 was a very strong year for the business which saw revenue and EBITDA grow by c. 36% and 33% to c. €24.1m and c.€1.9m, respectively. Headcount at Laydex increased by 7 to 44 during the year with an annual staff cost of c. €2.9m. Laydex generated negative cash of c. €370k for the period which can largely be traced to (1) a c. €1.74m investment into net working capital, (2) a c. €286k CapEx investment and (3) a €150k dividend payment. The predominant fixed assets in the business relate to motor vehicles (i.e. fleet) which account for nearly 80% of the book value of the fixed assets. The business is wholly owned by the Woods family.
RECENT FUNDRAISINGS
Who: Belfast-based price comparison website company Seopa has secured funding.
What: £390K (€456K) investment is backed by Invest NI.
Why: The funds will be used to help fund new roles, as well as company-wide training and development.
Source: Belfast Telegraph
Who: Dublin e-bike start-up Bleeperbike, led by Hugh Cooney, has received further funding.
What: The business has received a €250K injection from Enterprise Ireland.
Why: The purpose of the funding was not disclosed however the funding is believed to go towards preparing its electric bike launch for this summer after delays in refining the fleet.
Source: Fora
Who: Kitman Labs, Irish sports tech company founded in 2012 by Stephen Smith and Iarfhlaith Kelly, has secured further funding.
What: No financial details of the investment have been disclosed but company documents recently filed in Dublin show the Japanese consumer electronics giant Sony invested €439,044 in Kitman.
Why: The purpose of the funding was not disclosed however it is believed to be used towards expansion.
Source: Irish Times
Who: Tyrone construction group McAvoy has received funding from a London-based private equity firm Blantyre Capital.
What: Financial details were not disclosed but the deal is believed to be a multi-million pound cash-injection.
Why: The McAvoy Group posted accounts for October 2018 showing a 24.9% drop in revenue as well as reported pre-tax losses of more than £1.8m as the company has been hit by the ‘political and Brexit uncertainty’ in the UK. The funds will be used to help stabilise the business as well as future growth.
The McAvoy group were advised by Deloitte.
Source: Irish Times
Who: Grid Finance, a peer-to-peer lender for SMEs, has raised debt finance from Kilcullen Finance.
What: The amount raised is unknown although it is believed that Grid Finance has released Odysseus Investments, a French Investor, from its commitment to put up c. €1.1m after previously committing c. €3m.
Why: The funds are expected to be used by Grid Finance to continue to expand its lending base.
Source: Sunday Times
Thought for the Week
With Covid-19 dominating the airwaves the political landscape has been relegated in the news.
A quick check of Odds this AM on paddy power suggest Trump is nearly 60% certain to be re-elected at 8/13.
There is 40% probability of a second election this year 5/4.
Assuming there is a government formed it is virtually certain that it involves FF/FG and similarly Micheal Martin is almost certain to be Taoiseach in that event.
@RenatusCapital Tweets
7.8%
The year-on-year increase in the average house price in Northern Ireland for 2019 rising to £178,800 (€214,000), according to Ulster University’s latest Quarterly House Price Index. @BelTel
3.5%
The year-on-year increase in the average weekly earnings in Ireland for Q4 2019 rising to €783.62, according to @CSOIreland
4.4
The year-on-year drop in the Irish consumer and business pulse index for February 2020 coming in at 86.4 with 35% of people positive about the economy, according to the Bank of Ireland Economic Pulse. @IrishTimes
2.6%
The year-on-year increase in the volume of goods transported by road in Ireland for Q3 2019 amounting to a total of 42.1 million tonnes, according to @CSOIreland
0.5%
The year-on-year increase in the trips to Ireland by overseas residents for January 2020 amounting to 654,50 trips, according to @CSOIreland
3.7% & 3.5%
The year-on-year increase in the Irish retail volume and value indices, respectively, for January 2020, according to @CSOIreland
ABOUT RENATUS
Renatus was established in 2014 by Mark Flood and Brendan Traynor to provide growth funding to growing Irish SMEs and to partner with ambitious management teams to help companies reach their full potential.
Renatus targets companies with sustainable earnings of €1m+ and valuations of €5m and above. Our typical solutions include:
- Succession Planning
- Management Buyouts / Buy-Ins
- Funding for organic growth
- Acquisition Funding; and
- Share Sales
OUR INVESTMENTS
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Renatus’ Knowledge Centre
Our Knowledge Centre is filled with insights from some of Ireland’s top business leaders on Succession Planning, Management Buyouts / Buy-Ins, Growth Financing and much more.
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