Renatus Weekly M&A & Company Performance Private Equity Newsletter 02/07/2023

Deal Details: Zeus Packaging has acquired Cima Paper. Deal consideration was not disclosed.

Founded in 1998, Zeus is a leading Irish packaging company. It is owned by Brian O’Sullivan. Zeus now employs c. 1,100 people across 51 locations in 30 countries, including Ireland, UK, Germany, Spain, Poland, Eastern Europe, New Zealand, Canada, China and Australia. The business is targeting a reported c. €490m in revenue for its current financial year.

Cima Paper is an Italian company that specialises in commercial distribution and service in the paper and cardboard sector. It was founded in 1870 by the Cima family. The business has reported revenue of c. €65m.

Advisers:
Zeus Packaging:
Corporate Finance & FDD: An EY S&T team of Ronan Murray, John Higgins, Brad Harte, Christine Joy Landiza and Martin Loftus.
Tax: An EY team of Frank O’Neill and Ronan Dunne.

Cima Paper S.p.A:
None Mentioned

Renatus Comment: It was only two weeks ago that Zeus announced its acquisition of James Hamilton Group, and there is no slowdown being witnessed in its acquisition-led growth strategy with the business having now made six acquisitions across the UK, Ireland, and Canada since May last year, bringing its total to over 15. Notably, this is Zeus’ largest single acquisition.  The packaging industry is extremely fragmented, making growth by acquisition an attractive strategy, particularly for new market entry. As Zeus continues with this acquisition strategy it will be exciting to see the international scale which the business can reach, with it now operating in 30 countries.

Brian O’Sullivan continues to inspire, with the story of a business that began in a shed back in 1998 and has grown to become the largest Irish-owned packaging company. You can listen to the Renatus podcast where he discusses his remarkable journey here.

Source: Irish Independent

Deal Details: Carne Group will acquire GAM’s third-party fund management services businesses in Luxembourg and Switzerland for c. €3m.

Carne Group is a Dublin-headquartered provider of fund management solutions to the asset management industry, with over $2trn AUM on its Curator platform. The business was founded by CEO, John Donohoe in 2004. In FY Mar’22, the business had turnover of c. €53.1m, converting to an EBITDA of c. €9.9m. The deal will add c. €54m to Carne’s AUM.

GAM is an independent investment manager that is listed in Switzerland and has AUM of CHF 23.3 billion) as of 31 March 2023. GAM is headquartered in Zurich, with offices in 14 countries. In FY Dec’22, the business had turnover of €164.7m.

Advisers:

Carne Group:
Financial, Operational and IT DD: An EY Team of Devarshi Ray, Niall McCarthy and Gregoire d’Avout

GAM:
​​​​None mentioned.

Renatus Comment: Carne received an investment of €100m from Vitruvian Partners, a UK PE firm, in 2021, valuing the business at €400m and signalled its intention to grow by acquisition in the years to follow. This has rung true, with Carne having subsequently acquired 3D and Asset Management Exchange (AMX), previously owned by WTW. The firm has signalled its aim to become the leading digitally-driven platform for the asset management industry.

This deal sees Carne continue this expansion, broadening its existing presence in Switzerland and Luxembourg, having expanded into the regions in 2008 and 2006, respectively. GAM’s Swiss and Luxembourgian business represents an opportunistic play for Carne, with GAM being under pressure to sell the loss-making division due to its regulatory capital requirements. The deal will release regulatory capital for GAM and allow it to proceed with an acquisition of the business by Liontrust Asset Management, with the sale of the division forming one condition of the offer.

Source: Investment Week

Deal Details: Panelto Foods has been acquired by 3i-backed European Bakery Group. Deal consideration was not disclosed.

Panelto Foods is a Longford-based manufacturer of frozen bread products. Founded in 2004, and undergoing a major expansion in 2018 with the support of Enterprise Ireland and the Ireland Strategic Investment Fund, Panelto has grown into the UK. It is owned by William and Alison Malloy. In FY Oct’22, the business reported turnover of c. €62.9m which converted to an EBITDA of c. €6.1m.

European Bakery Group is a pan-European bakery platform specialising in bread and snack products. The company is headquartered in Tilburg and currently operating 9 bakeries across the Netherlands and Germany. The business does not report turnover or EBITDA information. 3i Group plc is a multinational private equity and venture capital company based in London.

Advisers: None Mentioned.

Renatus Comment: During 2022, we saw some consolidation in the Irish bakery space with Irish Pride being acquired by Pat the Baker. The ensuing crisis – regarding inflation and soaring energy prices, has contributed to this consolidation.

Unigrains reported 80 M&A deals for the bakery sector worldwide during 2022. Of the 80 deals recorded, c. 38% were acquisitions by financial companies (investment companies, family offices, etc). On the buy side, a few investment companies have been active in the space – with Bain Capital investing in Gail’s Bakery in 2021, an Aliante Partners-backed bakery acquiring Roberto Industria Alimentare in 2020 and Endless acquiring Hovis in 2020.

Source: 3i Press Release

Deal Details: Kingpsan has acquired waterproofing distribution specialist LRM. Deal consideration was not disclosed.

Kingspan, headquartered in Kingscourt, Co. Cavan, is a global leader in high-performance insulation and building materials solutions. Kingspan Group reported FY Dec 22 turnover of c. €8.3bn and EBITDA of c. €1bn. The business is led by CEO Gene Murtagh.

LRM is a Paris-based waterproofing distribution specialist. Products include fixings and accessories for roofs, waterproofing and facade products, lifelines, crinoline ladders and security railings. The business does not report turnover or EBITDA information.

Deal Details: NPP has acquired Food Processing Technology Irl Ltd. (FPT) Deal Consideration was not disclosed.

NPP is a Dublin-based packaging and machinery business founded in 1984. NPP supplies packaging to the food processing, beverage, agri-business and pharmaceutical sectors. The business is majority owned by Ken Martin, Dermot Dooley, and Eoin McDonagh. In FY Dec 21, the business reported turnover of c. €43.5m which converted to an EBITDA of c. €3.3m.

Food Processing Technology Irl Ltd is a Dublin-based food packaging business. The business is owned by Mark Connolly, James Connolly, and June Black. It is reported that the business has revenues of c.€6m.

Advisers: None Mentioned

Renatus Comment: There is no shortage of packaging deals in the newsletter as of late, with Zeus’ latest acquisition mentioned above. It was only last week that we reported on Packaging Holdings’ merger with Graham Holdings, with two more packaging deals this week.​ NPP itself is no stranger to acquisitions, with five reported acquisitions listed on its website, following the MBO of the business in 2008. This acquisition fits nicely with NPP’s strategy to become a “one-stop shop” for all flexible packaging. It is reported that NPP expects the acquisition of FPT to increase its overall revenues by c.10%.

Growing demand in the space reflects a 2021 Bord Bia survey stating that consumers are more focused on packaging and food waste than carbon emissions. Consumers are less focused on emissions “as it is currently more difficult to link the carbon footprint to the product on-shelf”.

Source: Business Plus

Deal Details: Fitting Image has been acquired by Stacked. Deal consideration was not disclosed.

Fitting Image is a Dublin-based company that provides AV system solutions for Irish businesses. The company was established in 1989 by  Liam Walsh. The business does not report turnover or EBITDA information.

Stacked is a Dublin-based Digital, Workplace and Managed Print Services provider to Irish and International customers. The company was founded in 2001. It is currently owned by Paul Sweetman, Gavin Byrne and Patrick Sweetman. This business does not report turnover or EBITDA information.

Advisers:
Stacked:
Corporate Finance: PKF led by David Lucas
Legal: Denis Finn & Co Solicitors
Banking: Bank of Ireland

Fitting Image:
Legal: An MVM team of Conor Mullany and Elaine Keane.

Renatus Comment: Stacked plans to expand its AV and Digital Solutions capabilities with this acquisition. The need for seamless audio-visual (AV) technology is being driven by the hybrid work environment. The pandemic demonstrated the importance of a reliable and robust AV infrastructure for businesses internationally.

There was significant consolidation in the industry during 2021, as businesses aimed to offer a robust suite of solutions and keep pace. Recent transactions include AVI-SPL announcing the acquisition of SKC Communications, Creative Realities merging with Reflect Systems, and Diversified acquiring HB Communications.

Source: Stacked Press Release

United Hardware to undergo restructuring

Deal Details: United Hardware, the co-operative with 160 member stores under the Homevalue brand is undergoing a corporate restructuring and merger of its members.

The combined group has sales in excess of €300m. The group’s ultimate aim is to create a Musgrave-style group of independents in the building materials sector. As part of the merger, United Hardware will seek to launch a ‘Homevalue.ie’ brand to increase its online presence.

Source: Sunday Independent

Davenham Switchgear Limited is a Dublin-based electrical distribution and control solutions provider. The business is majority owned by John Corcoran.

In its financial year to October 2022, the business generated a turnover of c. €111.0m, an increase of 41.6% year-on-year. Revenue attributable to geographical markets outside the Republic of Ireland amounted to 46% for the financial year. This converted to an EBITDA of c. €27.6m, an increase of 83.4% year-on-year. EBITDA improvements can be attributed to increased gross margin improvement and opex savings.

Significant post-EBITDA cash movements include working capital investment of c. €21.0m and dividends paid of c. €6.0m. The business finished the year with a cash balance of c. €9.7m, a decrease of 2.1% year-on-year.

The business employed an average of 204 people in FY22 at a total cost of c. €14.5m.