Renatus Weekly M&A & Company Performance Private Equity Newsletter 06/08/2023
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
THOUGHT FOR THE WEEK
It is no secret that we in Renatus idolise entrepreneurs. We are steeped in entrepreneurs in Ireland, an island where c. 99.8% (CSO,2020) of all active enterprises in Ireland are classified as SMEs.
Entrepreneurship is heavily intertwined with behavioural economics, as the decision to pursue a business venture is ultimately underpinned by the assessment of return and risk. We were delighted to read during the week the word “entrepreneur” has been traced back to Richard Cantillon, an Irish banker with French roots writing in the early 1700s, before Adam Smith made it more famous. Cantillon defined the entrepreneur as someone who conducts all exchanges and bears risk as a result of buying at certain prices and selling at uncertain ones.
In the case of many studies, empirical evidence can be mixed and entrepreneurs by their very nature are hard to define or put in a box but as early as the work of Cantillon (1755), Marshall (1890), and Knight (1921), entrepreneurs have been classified as risk bearers. In the book Principles, Ray Dalio poses the question “Imagine that in order to have a great life you have to cross a dangerous jungle. You can stay safe where you are and have an ordinary life, or you can risk crossing the jungle to have a terrific life. How would you approach that choice? Take a moment to think about it because it is the sort of choice that, in one form or another, we all have to make.” We are privileged to be playing in the jungle with so many brave and brilliant entrepreneurs.
Mediahuis Ireland acquires Paramount Packaging
Deal Details: Mediahuis Ireland, via its Reach Group subsidiary, has acquired Paramount Packaging. Deal details were not disclosed.
Mediahuis Ireland, part of Mediahuis Group, is a print and digital media publisher, based in Dublin. Mediahuis Ireland was formed through Mediahuis’ acquisition of Independent News and Media in 2019. The Irish business had FY Dec 21 revenue of c. €60.8m, while the group reported FY Dec 21 revenue of c. €304m, converting to an EBITDA of c. €26m.
Reach Group is a wholly owned subsidiary of Mediahuis Ireland. It is a logistics and supply chain specialist, with its business units including Reach-Delpac and Reach Stationery. The business does not report turnover or EBITDA information.
Paramount Packaging is a Wicklow-based supplier of food, industrial, luxury and pharmaceutical packaging products to business customers in Ireland. It is majority owned by James and Robert Kavanagh and was established in 1997. The business does not report turnover or EBITDA information.
Advisers: Paramount Packaging: Financial Adviser: Benchmark International Legal: Ivor Fitzpatrick & Company Solicitors
Mediahuis Ireland: Legal: Flynn O’Driscoll led by Alan O’Driscoll and Bláthnaid Hamilton. Tax & Financial: EY led by Niall O’Lideadha and Brad Harte.
Renatus Comment: We have seen a number of packaging deals in our newsletter in recent months, with Zeus being a serial acquirer, having acquired NIPS Ordnungssysteme, Cima Paper and James Hamilton Group in 2023, while NPP acquired FPT. The rationale behind these expansion strategies has primarily been increasing market share. Reach also acquired Delpac, a bespoke packaging supplier, in 2021.This latest acquisition by Reach Group will see it further diversify its logistics offering by adding Paramount’s packaging capabilities.
Glen Dimplex acquires Adax
Deal Details: Glen Dimplex has acquired Adax in a deal reported to be in the region of €30m – €35m.
Glen Dimplex is a Dublin Head-Quartered business provider of heating and ventilation, flame, precision cooling and consumer appliances. The company is majority owned by the Naughton family, with manufacturing and development centres in the Republic of Ireland, the United Kingdom, China and many other locations around the world. In FY Sep 22, the business reported turnover of c. €944m, converting to an EBITDA of €259m.
Adax is a Norway-based supplier and manufacturer of electrical heating and drying appliances to households and trade in Scandinavia and Europe. In FY Dec 21, the business reported turnover of c. €30.8m which converted to an EBITDA of c. €6.6m.
Advisers: Glen Dimplex: Legal: Fieldfisher led by Feilim O’Caoimh and Aoife Garrett
Adax: None Mentioned
Renatus Comment: In Jun’22, Glen Dimplex sold its Morphy Richards brand to a Chinese company, Xinbao for a reported c. €185m. It seems the proceeds are fuelling Glen Dimplex’s appetite to do more acquisitions in the electric heating space as a spokesperson for the company commented that the Adax acquisition will provide the business with “additional capability and a strong market position in the Nordic markets”. Earlier in 2022, Glen Dimplex acquired a UK-based energy management software business, SmarterDM. Source: Fieldfisher Press Release
Tricel acquires Gem Oils
Deal Details: Tricel has acquired Gem Oils. Deal consideration was not disclosed.
Tricel is a Kerry-based provider of engineering solutions for the water, environmental, construction and distribution industries. It was founded in 1973 by Anne and Con Stack and is still owned by members of the Stack family including Robert, Richard, Michael, Grainne and Cornelius. The company does not report turnover or EBITDA information.
Gem Oils is a Cavan-based business specialising in the supply of lubricants, grease and related products to several sectors include automotive, agricultural and industrial businesses. The business is owned by Helen Milligan and it does not report turnover or EBITDA information.
Advisers: Tricel: Deal Advisory: Ger Heffernan
Gem Oils: Copsey Murray
Renatus Comment: In 2021, we reported the acquisition of Alec Milligan’s Gem Plastics by the German based company, Schütz. The Gem Oils sale marks another milestone for the Milligan family as Helen, Alec’s daughter, is the CEO and main shareholder of Gem Oils.
Tricel began by producing products from glass-reinforced plastics and it has expanded significantly since 1973, whilst still remaining family owned. This is Tricel’s 6th acquisition in 18 months and follows Tricel’s last acquisition of Edincare Pumps in Jun’23, a UK-based provider of pump maintenance, repair, and installation services.
Source: Business Post
Kerry Group acquires Shanghai Greatang Orchard Food
Deal Details: Kerry Group has acquired Shanghai Greatang Orchard Food for a reported initial payment of c. €91m. Kerry Group is a taste and nutrition partner for the food, beverage, and pharmaceutical markets, with a broad range of solutions that reaches over 1bn consumers around the world. The Group was founded in 1972 as a co-op and was led by Denis Brosnan until 2003. Kerry Group is now led by Edmond Scanlon. In FY Dec 22, the business reported turnover of c. €8.8bn which converted to an EBITDA of c. €1.2bn.
Shanghai Greatang Orchard Food is a Shanghai-headquartered food business. It is reported that the business is expected to deliver full year 2023 revenue of c. €38m.
Advisers: None Mentioned
Renatus Comment: This is not Kerry Group’s first acquisition in China as it acquired Jining Nature Group, a Chinese manufacturer of savoury flavours and seasonings in 2021. Earlier in 2017, Kerry Group acquired the Chinese food ingredients company, Tianning Flavours.
Commenting on the acquisition, Edmond Scanlon (Kerry CEO) told analysts: “In China it’s been a pretty dynamic environment over the last number of years. I think it’ll be probably out into 2024 before we get back to, let’s say, a more normalised China scenario. We would continue to be pretty optimistic about the medium term and long term”.
Source: Irish Times
Jans Group acquires a majority stake in BlueMAC
Deal Details: Jans Group has acquired BlueMAC. Deal consideration was not disclosed.
Jans Group is a manufacturing group of businesses that specialise in composites. The Group includes ETRUX, Jans Composites, Jans Modular, Jans Lifestyle, and Bespoke. The Group was formed in 2019 by Ronan Hamill as part of an acquisition of a composites business from the Wright Group. The business is Head-Quartered in Antrim. The business does not report turnover or EBITDA information.
BlueMAC is a Dungannon-based business that specialises in the design, planning, and build of waste recycling facilities and material processing systems. The business does not report turnover or EBITDA information.
Advisers: None Mentioned
Renatus Comment: JANS Group announced a £50m growth plan in 2021 and it currently employs over 200 people across the UK. The link between all the businesses that Jans Group operates is a specialism in composites. Ronan Hamill (Jans Group, CEO) worked in Wrightbus as Global Head of Metallix and Composites and then became Operations Director at Terex. In an interview with The Belfast Telegraph, Ronan Hamill stated “The idea for the companies really came as a by-product of setting up a 10,000 sq m factory and filling it with something which is tangible and meaningful”.
Source: Insider Media
Laya Healthcare acquired by AXA
Deal Details: Axa has acquired Laya Healthcare from a unit of US rival AIG. The deal is reported to be worth c. €650m.
Laya Healthcare is the second largest healthcare insurance provider in Ireland. Headquartered in Cork, Laya employs over 600 people and provides coverage to over 690k members in Ireland. In FY Dec 21, the business reported turnover of c. €89.6m which converted to an EBITDA of c. €33.8m.
Axa is a French multinational insurance company that is an active player in the motor vehicle, commercial, home and farm insurance sectors in Ireland. The organisation has over 1,450 employees across its 34 branches on the island of Ireland. In FY Dec 22, Axa reported gross revenue of c. €102.3bn.
Advisers: Axa: FDD: PwC, led by John Casey and David Connolly Tax DD: PwC, led by Ronan Mac Niochlais and Tim Kiley Corporate Finance: Axa Group internal team and Fenchurch Market and Commercial Diligence: PwC, led by Kieran Little IT DD: PwC, led by Jonathan Hayes Legal: Matheson and Linklaters LLP
Laya Healthcare: Deal advisory: Morgan Stanley
Renatus Comment: Since AIG’s acquisition of Laya in 2015, the company has solidified its position as a leading healthcare provider in Ireland and developed a strong track record for growth and profitability. In May, AIG chief executive Peter Zaffino confirmed the group’s intentions to sell Laya as it narrows the focus of its Corebridge Financial unit, to focus on life assurance and retirement products. From Axa’s perspective this move will fast-track its entry into Ireland’s thriving health insurance sector. According to the latest data from HIA, almost 48% of the Irish population have some form of health insurance. This is being viewed as a positive move for consumers as it adds another strong multinational player to the market. For Axa, this acquisition will also provide the opportunity to cross-sell its products such as motor vehicle insurance where it holds over 30% of the Irish market.
Source: Irish Times
Bright Motor Group acquires motor retail business of Gowan Group
Deal Details: Bright Motor Group has agreed to acquire the motor retail business of Gowan Group for an undisclosed sum.
Bright Motor Group is a motor retail group offering Ford, Volkswagen, Citroen and other car brands. It is made up of four companies trading as motor dealerships and is based in Dublin. It had an FY Dec 21 turnover of €118m, converting to an EBITDA of €4.6m. The business is owned by Emma Hoy, Henry Flanagan, Joan & Matthew Smyth and Ciaran & Mary O’Riordan.
Gowan Group Limited is a holding company for companies including KAL Group, a kitchen and appliance distributor, Gowan Motors retail dealership and Senator Windows. The Group had an FY Dec 21 turnover of €392m, converting to an EBITDA of €13.5m. Its largest shareholder is Gemma Maughan.
Advisers: Bright Motor Group: Legal: Reddy Charlton, led by Roisin Bennet and Elaine McGrath.
Gowan Group: Deal advisory: Grant Thornton led by Michael Neary and Stuart Mellon. Legal: LK Shields led by Richard Curran and Pat Ryan.
Renatus Comment: The car dealership market across Europe, not just in Ireland, is highly fragmented, making it unsurprising to see increasing levels of consolidation across the industry. In Ireland, deals have included Lahart Garages’ acquisition of Ryan Motor Power and Joe Duffy Group’s acquisition of CAB Motor Company. The trend has gathered significantly more pace in the UK market, with Constellation Automotive undertaking a roll-up of both car dealerships such as Motorpoint, along with used car marketplaces such as Webuyanycar and Cinch. International players such as Alpha Auto Group have also entered the market, agreeing a £504m deal to acquire Lookers in the UK. With the increasing pace of the roll-up strategy in the UK market, it will be interesting to see whether these international consolidators cast an eye towards the Irish market.
Musgrave acquires Doyles Veg Prep
Deal Details: Musgrave has agreed to acquire Doyles Veg Prep. Deal consideration was not disclosed.
Musgrave is an Irish food retail, wholesale and food service company founded by brothers Thomas and Stuart Musgrave in Cork. In FY Jan 22, the business reported a turnover of c. €4.5bn, which converted to an EBITDA of c. €176.2m. The business is majority owned by the Musgrave family and a number of individual shareholders.
Doyles Veg Prep is a fresh food producer that supplies the Irish catering industry. The business was established by Bernard & Kieran Doyle in 1988 and was co-owned by Kieran Doyle & Jason Ray at the time of the transaction. Doyles Veg Prep has a range of 400 fresh food products and employs over 80 people operating from a temperature-controlled facility in Clondalkin, Co. Dublin. The company does not report revenue or EBITDA information.
Advisers: None mentioned.
Renatus Comment: This acquisition is Musgrave’s 5th since the start of 2022. Last week we reported on Musgrave’s acquisition of Ritter Courivaud. We outlined that Musgrave’s acquisition focus was on both retail stores and suppliers to niche aspects of the foodservice market. The acquisition of Doyles Veg Prep certainly fits this criteria, supplying fresh fruit, vegetables and dairy products to hotels, catering companies, bars and restaurants across Ireland. These acquisitions continue to align with Musgrave’s strategy of becoming a ‘world-class food and beverage business on the island of Ireland and beyond’.
Source: Business Plus
Kent acquired by Nemsa & Partners
Deal Details: Nesma & Partners, a Saudi Arabian construction giant, has agreed to buy Kent Group, the Irish-founded engineering services group, for an undisclosed sum.
Kent Group, based in Dubai, offers engineering services to oil and gas, petrochemical and renewable energy companies around the world and has reported annual revenues of $1.4 billion. The global engineering firm was founded in Tipperary in 1919 by Michael Francis Kent. Michael’s son Frank took over the business in the 1960s when it employed fewer than ten people.
In more recent times the business underwent a MBO in 1987 and examinership in 1992 in which the company was split into two, Kentz and Kentech. In 2008 Kentz was listed and in 2014, Kentz was sold to SNC-Lavalin, a Canadian engineering group, for C$2 billion. Seperately, Bluetech took a controlling stake in Kentech in the late 2000s. In 2020 Kentech acquired SNC-Lavalin’s oil and gas interests, including the Kentz business and reunited both business which rebranded to Kent.
Nesma, which is backed by Saudi Arabia’s Public Investment Fund (PIF), the owners of Newcastle United, and is one of the gulf’s biggest construction companies.
Advisers: None mentioned
Renatus Comment: Kent’s current chief executive, Cork man John Gilley, is to remain with the company following the takeover, as will the senior management team, many of whom are also Irish.
Kent was founded in Ireland and had a focus on the country’s telecommunications network and supported the first wave of foreign direct investment into Ireland. This is another prime example of an Irish business becoming a global leader from expertise gained through years of experience in Ireland. We previously reported that Irish companies such as H&MV, Mercury Engineering, MTM, KN Circet, Winthrop and PM Group, are contributing to the worlds roll out of datacentres after gaining invaluable experience in Ireland.
Source: The Times
Outhaus Group Limited is a Dublin-based provider of interior building materials such as bricks, paving, tiles and natural stone. The business is majority owned by the O’Sullivan family.
In its financial year to September 2022, the business generated a turnover of c. €25.0m, an increase of 32.1% year-on-year. This converted to an EBITDA of c. €3.6m, an increase of 33.7% year-on-year. Gross margins grew marginally over the year, increasing from 25.2% to 26.1%.
Significant post-EBITDA cash movements include working capital investment of c. €1.5m, the payment of tax and interest of c. €519k, the repayment of borrowings of c. €406k and dividends paid of c. €906k. The business finished the year with a cash balance of c. €6.2m, an increase of 21.9% year-on-year.
The business employed an average of 44 people in FY22 at a total cost of c. €2.0m.
Who: Phoenix Technologies, an Irish based independent firmware supplier for PCs and computing devices globally. It is run by Gerard Moore and Jonathan O’Connell.
What: The business has raised new venture debt from the Claret European Growth Capital Fund.
Why: The new raise will help fund its growth programme.
Advisers: Pheonix Technologies: Corporate Finance: Davy led by Shane O’Neill, Peter Bennett and John Currie Legal: McCann FitzGerald led by Ben Gafakin
Claret European Growth Capital Fund: Claret Team led by Brian Geraghty and Charlotte Stephenson Legal: William Fry led by Laura Houlihan
Source:Davy Press Release
Who: Smithstown Light Engineering, a precision engineering and contract manufacturing company headquartered in Clare.
What: The company has raised new debt facilities from Bank of Ireland.
Why: The new debt facilities will be used to support the continued growth in the business.
Advisers: Smithstown Light Engineering: Deal Advisory: Deloitte Debt & Capital Advisory led by Brian Fennelly and Ross O’Donovan. Legal: RDJ
Bank of Ireland: Legal: William Fry
Source:Deloitte Press Release
Who: Tailr, a cloud-based platform providing sizing and production features for the clothing industry.
What: The business has raised €300k from venture capital firm, Delta Partners, with an additional €400k from UK investor Haatch, Enterprise Ireland and other angel investors.
Why: The capital raised will be used to fuel Tailr’s existing growth plans.
Who: Zevo Health, a Workplace Wellbeing technology provider based in Dublin.
What: The business has raised funding from ScaleUp capital, a UK-based digital B2B investor.
Why: The investment will support the business to scale its operations and expand its reach within the Trust & Safety sector.
Advisers: Zevo Health: Corporate Finance: Pegasus Capital led by David Lawrence, Mark McCoy and Conor McDonald. Legal: Flynn O’Driscoll led by Diann Cannon and assisted by Jonathan O’Beirne, Deirdre Walsh and Pat Flynn.
ScaleUp Capital: Legal: HCR London and Sheehan & Co Dublin.
Source:Pegasus Capital Press Release
Who: Zick Learn, the Dublin-based EdTech start-up.
What: The business has raised €500k in a funding round led by Zanichelli Venture and a number of angel investors.
Why: The funding will be used to increase its staff and accelerate growth in Ireland, the UK and Europe.
EXECUTIVE AND BOARD APPOINTMENTS
We in Renatus believe that more important than the deals are the people and we are pleased to provide you with details of key recent executive and board-level appointments.