Renatus Weekly M&A & Company Performance Private Equity Newsletter 05/06/2022

Deal Details: CRH has announced the acquisition of North American business Barrette Outdoor Living from Canadian private equity firms TorQuest Partners and Caisse de dépôt et placement du Québec. The deal consideration was reported to be c. €1.8bn ($1.9bn).

Headquartered in Dublin, CRH plc is an international group of diversified building materials businesses. It manufactures and supplies a wide range of products for the construction industry. The business trades on the London stock exchange under the ticker CRH and reported revenue of c. €31bn in FY21 and employs c. 77,000 people.

Founded in 1978 and headquartered in Ohio, Barrette Outdoor Living is a manufacturer and retailer of products for the outdoor living industry. The business is reported to have had annual revenue of over $500m in FY22 and employs over 1,000 people.

Advisers:
Barrette Outdoor Living:
Financial: Barclays acted as financial adviser to Barrette Outdoor Living.

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 with CRH completing an astounding 29 transactions since 2020.

Since late 2020 there has been a trend of CRH divesting from emerging markets as seen in the sale of its Brazilian cement business and its Indian home business both in 2020 and focusing more on the developed market regions. This acquisition fits this strategy and allows CRH to add a well-established and growing business in North America to its portfolio as well as create the potential for synergies across its North American divisions.

CRH stock took a dive following the markets’ realisation of the seriousness of the situation in Ukraine due to the business’ exposure in this region and has remained low in comparison to the level CRH traded at over the previous two years. Markets do however appear to be reacting positively to this transaction with CRH stock jumping from $40.57 on June 1st to $42.07 immediately following the announcement of this transaction.
Source: CRH Press Release

Deal Details: US-based Cathexis has announced the acquisition of the Irish-based Engineering business, Jones Engineering. The deal consideration was not disclosed but is reported to be in the hundreds of millions.

The deal is subject to regulatory approval. Jones Engineering is a multi-disciplined engineering contracting company, offering a complete range of engineering and building services installations. The group reported a turnover of over €725m in FY20 which converted to an EBITDA of almost €64m and employs c. 2,000 staff.

Cathexis Holdings LP is a private equity and venture capital firm, based in Texas in the United States. The business is the family office of the firm’s CEO, William Harrison.

Advisers:
Jones:
Legal: A McCann FitzGerald team consisting of Stephen Fuller, Brendan Murphy, Riccardo Savona Siemens, Amy Ryan, Aoife McCarthy and Niamh O’Leary together with Laura Treacy, Donal Hamilton and Alan Heuston.

Cathexis:
Corporate finance:  An EY team consisting of Tom Watson, Dan Villarreal Flores, Chinmay Punekar and Abha Dhawan advised Cathexis.
Legal: A Pinsents Masons team consisting of Gerry Beausang, Gavin Hickey, Connall Ennis and Rob Hutchings provided legal advice to Cathexis.
Renatus Comment: Cathexis Holdings has clearly identified the Irish and UK engineering services industry as a key growth area having acquired Dublin-based specialist technical, mechanical, and electrical engineering contractor, Leo Lynch just two weeks ago. Cathexis also holds a stake in ISG Ltd, a UK-based engineering and construction services company, which generates c. £2bn in revenues p.a.

Source: Irish Independent

Deal Details: Irish founded plc, Tullow Oil is to acquire British plc Capricorn Energy, formerly Cairn Energy. The deal is reported to be worth c. €771m and will see Cairn Energy receive 3.8068 Tullow Oil shares for each Cairn share. Tullow will own 53% of the combined group at the end of the transaction.

Founded in Tullow in 1985, Tullow Oil plc is a multinational oil and gas exploration company, with its headquarters in London, United Kingdom. The company is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index under the ticker ‘TLW’. The business reported FY21 revenue of £925.7m.

Founded in 1980, Capricorn Energy plc is a British oil and gas exploration and development company and is also listed on the London Stock Exchange under the ticker ‘CNE’. The business reported FY21 revenue of c. £41m. Following this transaction Tullow’s chief executive, Rahul Dhir will lead the combined group.

Advisers:
Capricorn:
Financial: Morgan Stanley and Rothschild & Co acted as financial advisers for Capricorn.
Legal: Slaughter and May and Shepherd and Wedderburn LLP are legal advisers to Capricorn.

Tullow:
Financial: PJT Partners and Barclays advised Tullow.
Legal: Herbert Smith Freehills LLP acted as legal adviser to Tullow.

Renatus Comment: The combined entity will operate under a new name that has not yet been disclosed and will be highly focused on the African energy markets. This comes as no surprise given Tullow’s flagship oilfields are located in Ghana and Capricorn’s significant stake in Egyptian onshore gas fields. These two assets will make up the biggest share of the group’s reserves and production.

The public markets responded positively to this announcement with Capricorn Energy stock rising from 196.0GBX on the 31st of May at 8 am to 205.20GBX on the 1st of June at noon, immediately following the announcement.

Source: Reuters

Deal Details: NIRAS has acquired Irish consultancy business Dolmen Engineering. The deal consideration was not disclosed.

Founded in 2014, Dolmen Engineering is an Engineering Consultancy business specialising in the execution of projects in the pharmaceutical and life science industry based in Castlebar with a design office in Dublin and a UK office in London.

Niall Corrigan, founder & CEO, has built Dolmen to be a critical value-add partner in life science engineering projects focusing on Dolmen’s design and execution capabilities. Dolmen employs a total of 70 staff and contractors and is reportedly on track for €10m of turnover in 2022.

NIRAS International Development Consulting is one of Europe’s largest development consulting firms and employs over 2,400 staff. The business has 51 offices in 32 countries. The business reported revenue of c. DKK1.5bn (€205m) and an EBITDA of almost DKK 85m (€11.4m).

Advisers:
Dolmen:
Corporate finance: An IBI team consisting of Ted Webb, Raymond Donegan, Michael Moriarty and David Banks
Legals: JP Galligan and Edward Johnston from Clark Hill Law

Niras:
Legals: Joe McVeigh and Jennifer Watters of BHSM.

Renatus Comment: While NIRAS is a reasonably active acquirer having bought 4 businesses over the past five years, this acquisition is NIRAS’ first outside of Northern Europe (Denmark and Sweden) since 2013 when the business acquired a UK-based business. Given the business’ somewhat stagnant revenue figure hovering around €200m for the past five years, this is a possible indicator that the business is pursuing growth outside of its home market of Northern Europe and may be the first in a series of acquisitions throughout Ireland and other European states.

Source: NIRAS Press Release

Deal Details: Irish business, CameraMatics has acquired UK-based Telematicus. The deal consideration was not disclosed but reports suggest the deal was valued between €3-5m.

Founded by Mervyn O’Callaghan and Simon Murray in 2016, CameraMatics is a modular software platform based on camera technology, vision systems, AI, Machine Learning, and Telematics. The business reported FY21 turnover of c. €2.35m and employs c. 32 staff. The business is owned by founders, Mervyn O’Callaghan and Simon Murray as well as investors and management.

Founded in 2009, Telematicus provide data capture, storage, and AI analysis. The business is majority-owned by Adrian Dore with Simon Ralphs holding minority ownership. Telematicus reportedly employed c. 12 staff throughout FY20.

Advisers: None mentioned.

Renatus Comment: CameraMatics has experienced outstanding organic growth since its founding with revenue growing from c. €300k in 2017 to almost €2.5m in 2020 and 2021. This deal is the business’ first acquisition and with multiple backers including the likes of Puma Private Equity, Sure Valley Ventures, Enterprise Ireland, and self-storage entrepreneur Seamus Lonergan, it will be interesting to see if M&A will be part of the business’ strategy during its next phase of growth.

Source: CameraMatics Press Release

Deal Details: US-based Cambrex has announced the acquisition of Waterford-based Q1 Scientific. The deal consideration was not disclosed.

Q1 Scientific was established in 2012 to provide world-class stability storage to service the life sciences sector.  It was the first company in Ireland to specialise in the provision of stability storage and sample management meeting the highest-international standards.

Cambrex is a leading global contract development and manufacturing organisation (CDMO) that provides drug substance, drug product, and analytical services across the entire drug lifecycle. Most of its customers are in the pharmaceutical industry. The business was founded in 1981 and employs c. 2,200 staff throughout North America and Europe. The business reported FY18 revenue of almost £400m which converted to an EBITDA of over £110m.

Advisers:
Cambrex:
Legal: Arthur Cox partnered with Ropes & Gray LLP in advising Cambrex Corporation. The Arthur Cox team was led by Maeve Moran and Eoin McCague (Corporate and M&A).

Q1:
Legal: Wallace Corporate led by Patrick O’Shea, Alan Ryan, Kathryn Mitchell and Sean Burke.

Renatus Comment: Q1 Scientific was created to meet the increase in outsourcing of activities within the life sciences sector.  The founders identified the market demand for environmentally controlled storage services and created a purpose-built facility in Waterford.  We understand that Q1’s customers are the ‘who’s who’ of the life sciences sector in Ireland and it is winning business internationally, a product of the investment in the facility and business model, adherence to quality, the experience of the team and the founders’ relationships within the life sciences sector.

Source: Cambrex Press Release

Deal Details: Ireland’s largest estate agent, Sherry Fitzgerald, has been acquired by CastleGate investments. The deal consideration was not disclosed but is reported to be close to €50m.

Sherry Fitzgerald has been operating for almost 40 years. It has 100 offices, including 70 franchises, across Ireland. The group reported FY20 turnover of c. €25m which converted to an EBITDA of over €4m. Sherry Fitzgerald employed an average of 243 staff throughout FY20 and is led by current CEO, Steven McKenna who is expected to remain in this role following the completion of this acquisition.

CastleGate is a private Irish family fund owned by Tommy Kelly and is led by former Goodbody Stockbrokers chief executive, Roy Barrett.

Advisers:
Sherry Fitzgerald:
Corporate finance: A PwC led by Mark McEnroe, James McMenamin and Conor McCarville.
Financial: Ron Somers and Brian Delaney from PwC
Commercials DD: Kierlan Little (PwC)
Legal: A McCann Fitzgerald team consisting of Garreth O’Brien, Charlotte Blackmore, Rachel O’Neill and Ciaran Sweeney.

Renatus Comment:
The top of the last boom featured a lot of exits by property players. Gunnes exited both commercial and residential, HOK sold to Savills, Jackson-stops sold 60% to Colliers, MyHome.ie sold to IrishTimes for €50m (Sherry Fitzgerald owned 23.5% of it).

The soil conditions are different in 2022 with Sherry Fitzgerald mainly focused on residential and house completions which are running at 1/3 of the 2006 levels. This suggests there is not the same bubble in activity in the space.

Source: Sherry Fitzgerald Press Release

Deal Details: Deal Details: BGF is reported to have invested c. €12.5m into Revive Active. The deal is subject to CCPC approval.

Revive Active was founded in 2011 by Dáithí O’Connor and offers a range of 10 uniquely formulated products that offer benefits such as increased energy, immunity, and general wellbeing. Revive Active employs over 60 people across its head office in Galway and two production facilities in Mullingar. For the period ending FY Dec 20, Revive Active generated a net profit of c. €2.2m.

Prior to this investment, the business was owned by Dáithí O’Connor and Pat McDonagh, the owner of Supermacs, with Dáithí O’Connor reported to be the majority shareholder post-acquisition.

BGF is a private equity investor with operations in the UK and Ireland.

Advisers:
Revive Active:
Financial: Mazars advised Revive Active on the deal led by John Bowe and Eoin O’Keeffe.
Legal: Addleshaw Goddard advised Revive Active on the deal.

BGF:
Legal: Beauchamps provided legal advice to BGF on the Revive transaction led by Shaun O`Shea, Kyle Wimpress and Emily Harrington.
​​​​​Tax: Mary Gara of Gara Ryan Tax and Business Consultants provided tax advice on the Revive Active transaction.
Financial: Brendan Lenihan of Navigo Consulting

Renatus Comment: Revive Active has incorporated a brand ambassador strategy with great success over the past few years with female entrepreneur Pippa O’Connor, author and wellness entrepreneur Roz Purcell, Irish rugby star James Ryan and Irish professional footballer John Egan all publicly endorsing the brand.

Daíthí O’Connor is a great role model for anyone in a corporate career having an itch to set up a business.

He was a very accomplished banker having served both AIB and Anglo Irish Bank prior to founding a financial services advisory business en route to setting up Revive. He has covered every part of the Irish market and this investment should help Daíthí to go deeper into international markets.

Source: BGF Press Release

Deal Details: Deal Details: BGF is reported to have acquired a minority stake in the Dublin Meat Company for c. €10m. The deal is subject to CCPC approval.

Founded in 2005 by Paddy O’Leary, Dublin Meats Company is an Irish-owned and family-run craft butcher with a sub-brand, Fit Foods that provides clean, macro-friendly Ready Meals, Soups, and Protein Pots. The business is led today by Paddy O’Leary’s sons, Brian and David O’Leary.

Dublin Meat Company is also reported to be acquiring Swift Fine Foods, a Monaghan-based food processor and supplier founded in 2001 by Michelin Star Chef Eamonn Walsh.

Latest accounts in the CRO show that Dublin Meat Company generated a net profit of c. €730k for the period ending FY Dec 20. Swift Fine Foods generated revenue of c. €15.2m and a net profit of c. €711k for the period ending FY Dec 20.

Bank of Ireland is reported to be providing debt support to Dublin Meat Company to support the investment.

BGF is a private equity investor with operations in the UK and Ireland.

Advisers:
Dublin Meat Company (investment from BGF):
Corporate finance: Clearwater led by John Curtin and Daniel Lavelle
Financial DD: Mazars led by Mark Mulcahy provided vendor financial due diligence
Tax: Mazars

Dublin Meat Company (acquisition of Swift Fine Foods):
Financial & Tax: Mazars, led by Mark Mulcahy, provided finance and tax due diligence support on the transaction.

BGF:
Legals: Maples led by Paddy Quinlan, William Darmody and Emma Sheehy advised on the Dublin Meats transaction.
​​​​​Tax: Mary Gara of Gara Ryan Tax and Business Consultants provided tax advice on the transaction.

Swift Fine Foods:
Corporate Finance: Gareth Cosgrove and David Cole of Grant Thornton provided corporate finance advice.
Tax: Sinead McKeaney and Emer Dowling of Grant Thornton provided tax advice.

Renatus Comment: Swift Fine Foods currently produces Fit Foods’ range of ready meals. This acquisition will allow Dublin Meats to control its supply chain and expand production further as the business grows. It is currently supplying a reported 120k ready meals which are distributed weekly.
​​​​
Source: BGF Press Release

Deal Details: Deal Details: Belfast-based, Mzuri Group has acquired UK-based shutter business, Shuttercraft. The deal consideration was not disclosed.

Mzuri Group is currently made up of 12 companies with over 1500 people designing, engineering, and supplying window coverings. The group reported FY20 revenue of over £109.0m and an EBITDA of nearly £9.0m.

Based in Winchester, UK Shuttercraft is one of the UK’s largest shutter companies and employs c. 49 staff. The business was founded in 2004 and was majority-owned by Robert James, Mark Stradling as well as Beechbrook Capital, and various other members of the management team prior to this acquisition. The business reported FY20 revenue of c. £23.0m and an EBITDA of over £2.0m.

Advisers: None mentioned

Renatus Comment: Mzuri group has been a highly active acquirer in the window blinds and shutters space since BGF invested c. £10m in 2020. Since this investment Mzuri has acquired six businesses prior to the above deal which include TCMM Shutter Group, Tropical Blinds, Vako, Makemyblinds.co.uk, and iSeekBlinds.

This deal also provides an exit for Beechbrook Capital which supported the Shuttercraft team in an MBO in 2018.

Source: The Irish News

Iberdrola exits the Irish market

Deal Details: Spanish energy giant Iberdrola has announced plans to exit from the retail energy supply business in Ireland. Iberdrola is a global energy business, and is one of the world’s biggest electricity utilities in terms of market capitalisation. In Ireland, the group has c. 32,000 Irish customers made up of residential users and small businesses.

Source: Irish Times

Bank Of Ireland’s takeover of Davy Wealth Management is completed

Deal Details: Bank of Ireland’s acquisition of Davy’s wealth management, capital markets, and associated businesses, announced in July, has been cleared by the CCPC and completed. The final consideration was reported to be c. €427m. Bank of Ireland will acquire sole control of Davy’s capital market and wealth management businesses, which are part of Amber Note unlimited Company, the parent company of Davy.

Source: Business Plus

Founded in 1916, Henry J Lyons Architects is an Irish architectural practice based in Dublin City Centre on Pearse Street with a second location in Lavitt’s Quay in Cork. The business employs over 300 architects, designers, and support staff.

The business reported a turnover of c. €36.1 which converted to an EBITDA of c. €1.0m. While turnover remained roughly flat year-on-year, EBITDA increased by over 30% year-on-year due gross margin improvements. The two big movements on the cashflow statement were a c. €1.8m net inflow of cash from working capital movements and a c. €600k spend on fixed assets. The business reported a closing net cash balance of c. €12.8m in FY21, a year-on-year increase of c. €2.3m.

HJ Lyons employed c. 307 staff throughout FY21 at a cost of almost €26.5m.  The business is owned by seven individual shareholders.

Tempside Limited (Trading as Polonez) is a chain of specialist Polish stores with 35 locations all over the UK and Ireland. The business has been operating in Ireland since 2003.

The business reported FY21 turnover of c. €55.1m which converted to an EBITDA of c. €3.5m. This represents a year-on-year increase in turnover of c. 14.2% and a year-on-year EBITDA decrease of c. 21%. Despite the year-on-year decline in EBITDA, Polonez is still on an impressive growth trajectory. It has nearly doubled revenue in the last three years and more than doubled EBITDA during the same period.

Significant post EBITDA cash movements include a working capital investment of c. €938k, payments to acquire investment property of c. €1.7m, and payments to acquire property plant and equipment amounting to c. €1.7m. The business closed FY21 with a net cash balance of c. €925k which represents an increase of c. €360k from the previous year.

Adrian Rezmerita is the ultimate controlling party of the company. The business employed c. 398 staff throughout FY21 at a cost of almost €10m. The Director’s Report notes that there was a group restructure after the year end.