Renatus’ Weekly M&A Newsletter – 29/08/2021
August 29, 2021Renatus’ Weekly M&A Newsletter – 12/09/2021
September 12, 2021
Renatus Weekly M&A & Company Performance Private Equity Newsletter 05/09/2021
Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
M&A ACTIVITY
SSE Cleaning is acquired by CWS
Deal Details: Specialised Sterile Environments Ltd (SSE) has been acquired by a German-based services group CWS International GmbH for an undisclosed amount.
SSE, founded by Mary O’Connell in 2003, specialises in Cleanroom decontamination and hygiene services to the Irish Pharma and Medtech industry. The company operates across 70 customer sites in Galway, Dublin, Athlone and Limerick.
CWS Cleanrooms is part of the €1.3bn CWS Group headquartered near Dusseldorf, Germany. It is one of Europe’s foremost providers of complete cleanroom solutions. The group currently employs c. 11,000 people in 15 countries.
In Ireland CWS provides a range of cleanroom, workwear rental and hygiene services to almost 5,000 customers.
Advisers:
CWS:
Buyside Advisory & Financial DD: Greg Hogan, Eoin Healy and Conor Gleeson from Baker Tilly
Tax DD & Advisory: Alma O’Brien, Colin Dignam and Kate Prendiville from Baker Tilly
Legals: Ainsley Heffernan, Daire Russell, Stuart Conaty, Paul Gough, Deirdre Cahill, Katarina Takacova and Patrick Watters of Beauchamp Solicitors
SSE:
Sell Side Advisory: Led by Ray Cantwell Business Consultants
Financial Advisor: John O Beirne of OMB Accountants Limited
Tax: Paraic Waters of EY
Legals: Ray Darcy, Paddy O’Connell and Cianna Darrall from McSweeney Law Firm
Renatus Comment: This looks to be a highly complementary acquisition for CWS. CWS already has a foothold in the Irish market generating €31m of revenue and employing 370 here. Cleanroom services are just one segment of its business here and the acquisition of SSE helps CWS achieve its ambition of doubling its cleanroom business over the next five years. In its most recent set of accounts for the period ending December 2020, SSE reported a net profit of c. €470k.
This acquisition follows prior acquisitions made by CWS of WERO a Dutch specialist for cleaning cleanrooms, and profi-con, a German cleanroom cleaning company with presence and online training expertise.
Source: SSE Cleaning
Pollen Street acquires majority stake in Ding
Deal Details: A majority stake in Irish mobile top-up service provider Ding has been acquired by Pollen Street Capital. Financial details have not been disclosed, however the equity value is reported to be around $300m.
Ding provides international top-up and credit transfers to millions of customers globally. Ding was founded by Mark Roden in 2006. As part of the deal, Mark Roden has made a significant investment in the company.
Pollen Street Capital, formerly the private equity business of Royal Bank of Scotland, is an independent, alternative investment management company.
Advisers: None mentioned
Renatus Comment: This is an incredible result for Mark Roden and many more who were on the Ding journey. Roden was around the table with Denis O’Brien at the start of Esat Telecom and has had a rollercoaster ride with Ding. Ding has largely bootstrapped its way to success with this deal marking the first time its taken in formal external funding. Last year, it made a reported $58.5m turnover and $15m EBITDA.
Source: Irish Times
HMC acquired by Murgitroyd
Deal Details: Hanna Moore + Curley (HMC), an Irish legal practice, has been acquired by Scottish patent law firm Murgitroyd for an undisclosed sum.
HMC, founded in 2003, is one of the State’s largest patent and trademark legal firms. Headquartered in Dublin, it also has presence in China.
The practice office remains in Dublin and they will now operate under the Murgitroyd banner.
Glasgow-headquartered Murgitroyd is a leading global provider of Intellectual Property Services. It has close to 100 patent and trademark professionals and more than 360 staff.
Advisers: Tony Carey (Corporate Finance) and Gordon Hayden (Taxation advisory) of Cooney Carey acted for HMC on this transaction.
Renatus Comment: Murgitroyd Group was listed on the AIM stock exchange up until 2019. During that time, it completed seven acquisitions, the majority of which were in the UK market. While it does already have a presence in the Irish market, the acquisition of HMC is its first acquisition in the Irish market.
In 2019, Murgitroyd Group was taken private as part of a reported €76m transaction with Sovereign Capital. Latest financials for the Group show it generated c. €5.2m of EBITDA in the fiscal year ending May 2019.
Source: Murgitroyd
Kainos acquires UNE Consulting
Deal Details: Belfast-based software company Kainos has acquired UNE Consulting, based in Buenos Aires, Argentina. The deal consideration was not disclosed.
Kainos Group plc is a leading digital technology company and Workday Services Partner, operating in two specialist divisions, Digital Services and its Workday Practice.
Kainos reported revenues of £235m in the year ending March 2021, a 31% increase year-on-year.
UNE Consulting offers deep expertise in the full range of Workday services. UNE has an experienced team of 42 who are working across multiple international projects across the Americas, as well as Europe and Asia.
Kainos & UNE have been working on joint projects since 2019 and the acquisition builds on this successful relationship.
Advisers: None mentioned
Renatus Comment: Kainos has been growing at an extremely fast rate in recent years. It has nearly trebled its revenues in the last four years, growing from £83.5m in FY Mar 17 to £234.7m in FY Mar 21. Shareholders have been rewarded along the way with the share price having increased by 7x during the same period.
Part of this growth has come through acquisitions. In 2020, it acquired US-based Intuitive Technologies and in 2019 it acquired German company IMPLEXA and Formluate Adaptive Limited, a UK company.
Source: Kainos Press Release
NEXA is acquired by Transcat
Deal Details: Cork-headquartered lifesciences firm NEXA has been acquired by Nasdaq-listed Transcat in a deal worth up to $30m based on cash, shares and a potential earnout subject to conditions.
NEXA (formerly Cal Opex), founded in Carlow in 2015, provides calibration and other technical services to pharmaceutical, biotechnology, and medical device companies worldwide.
Transcat Inc, founded in 1964, is North America’s largest and leading calibration and compliance services providers for the pharmaceutical, industrial manufacturing, energy, and chemical process industries.
Advisers: None mentioned
Renatus Comment: NEXA generates c. $7.5m in annual revenue, c. 70% of which comes from the United States with 30% coming from Ireland. In FY Dec 19, the business made a net profit of c. €680k.
Prior to the transaction, NEXA was owned by John Cummins (95%) and Ross Lane (5%). John Cummins will continue to lead the business post-transaction.
Source: Transcat Press Release
DEAL UPDATES & OTHER NEWS
AIB completes Goodbody acquisition
Deal Details: Following regulatory approval, the AIB acquisition of Goodbody has been completed.
The deal to buy Goodbody from its existing shareholders for a reported Enterprise Value of about €82m was first announced in March. There is a reported €56m of surplus cash on Goodbody’s balance sheet.
Goodbody will remain a separately regulated entity and will form part of AIB Capital Markets.
Source: RTE & Irish Times
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
Based in Cork, Dansko Foods is a producer and trader of dairy products, including butter, cheese and dairy cream.
For the period ending FY Sep 20, turnover increased by c. 16% to c. €47.0m while EBITDA declined by c. 25% to €0.4m. The drop in EBITDA can be traced to a roughly one percentage point decrease in gross margins to c. 4% during the period. It is an export driven business with c. 93% of revenue coming from outside of the Republic of Ireland.
Cash increased by c. €1.2m during the period to end at 2.3m. The biggest drains on cash €336k in fixed asset purchases and €171k in loan repayments. These were offset by a €1.45m release in cash from working capital.
Dansko employed an average of 50 staff during the period at a cost of c. €1.9m. Dansko foods is owned by members of the O’Neill family.
Glanmire Supermarkets Limited operates a retail supermarket within the SuperValu chain at Crestfield Centre, Glanmire, Co. Cork.
In its financial year to December 2020, the business reported revnue of c. €32.7m (an increase of 21.1% YoY) which converted to EBITDA of c. €3.2m (an increase of 53.4% YoY). Cash on hand increased by c. €1.8m during the year with fixed asset purchases of c. €518k being one of the most significant uses of cash.
Galnmire Supermarkets Limited is owned by Diane and WIlliam Ryan. The business employed an average of 217 people during the year at a cost of c. €3.8m.
RECENT FUNDRAISINGS
Who: Kollect on demand, a waste removal platform based in Waterford. The business is led by CEO John O’Connor.
What: The company has raised approximately SEK 30.2m (c. €2.97m) through the exercise of warrants that were issued in the third quarter of 2020.
Advisors: Mangold Fondkommission AB is the financial adviser and Eversheds Sutherland Advokatbyrå AB is the legal advisor to Kollect regarding the warrants.
Why: The proceeds mean that Kollect is well capitalised and able continue executing on its growth strategy.
Source: Kollect press release
Who: Oblivious AI, a Dublin-based privacy tech start-up, has secured funding.
What: $1m (€850,000) was raised in pre-seed funding round from a group of angel investors and VC firms including Atlantic Bridge, Act Venture Capital and Hustle Fund.
Why: The financing will support hiring of staff.
Source: Independent
Who: Spadetown Brewery, a new brewery based in Lurgan, Co. Antrim, has received investment. The brewery will open in October and plans to brew lagers, IPAs and special edition beers, which are expected to go on sale in the on- and off-trade.
What: Initial planned investment of over £2m investment is led by Vernon Fox and backed by local business people including Novosco founder Patrick McAliskey.
Why: The investment will support creation of approx. 55 jobs by 2023.
Source: Hospitality Ireland
Who: Dunport Capital Management, an alternative lender founded by Pat Walsh and Ross Morrow.
What: Dunport has completed the first close on a new SME direct lending fund, raising €225m. The Irish Strategic Investment Fund (ISIF) have made a substantial commitment to the fund.
Why: Funds raised will be used to provide loans to SMEs in the Irish and UK markets.
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.
Donal Flynn
Source:
(Google Images & LinkedIn)
THOUGHT OF THE WEEK
When we look at the sovereign debt and prospects of further borrowing we all get a little scared. However, the Central Bank data for household net debt is very encouraging:
- July 2020 €89bn loans for house purchase debt has reduced to €82bn this July.
- Consumer credit has reduced to €11.4bn from €12bn; and
- Household deposits increased from €120bn to €134bn in the 12 months to July 2021.
This is undoubtedly spilling over into general consumption and bodes well for the near term prospects of Consumer spending.
@RenatusCapital Tweets
67% & 55%
The year-on-year increase in the Irish overseas passenger arrivals and departures, respectively, for July 2021 amounting to 380,700 arrivals and 428,600 departures. Vs pre-covid July 2019 the respective figures were 83% and 80% lower. @CSOIreland
5.01m
The estimated Irish population as at April 2021, a 0.7% increase year-on-year. This is the first time since 1851 that Irish population has exceeded 5m.
@CSOIreland @IrishTimes
12.4%
The Covid-adjusted Irish unemployment rate for August 2021, which includes those receiving the PUP. This is down from 17.1% in August 2020, according to @CSOIreland
3.9%
The year-on-year increase in the Irish average weekly earnings for Q2 2021 with the average weekly pay amounting to €849.69, according to @CSOIreland
63.7
The AIB Purchasing Managers’ Index for August 2021, down from July reading of 66.6, however still the second strongest since 2016, according to @RTE
6.3%
The Irish GDP growth for Q2 2021 amounting to €103.4bn, according to @CSOIreland
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ABOUT RENATUS
Renatus was established in 2014 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 typically in the range of €5m – €20m. Our typical solutions include:
- Succession planning
- Management buyouts
- Management buy-ins
- Growth financing – both organic and acquisition growth financing
- Full and partial share sale.
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