Renatus Weekly M&A & Company Performance Private Equity Newsletter 06/12/2020

Deal Details: The Viatel Group has acquired Irish Telecom Services from Paradyn for an undisclosed amount.

Irish Telecom, with offices in Dublin and Cork, has been delivering high speed, high performance networks since 2009. Its clients include leading Irish businesses and bodies such as Folens Publishers, Irish Continental and Booking.com, along with leading Credit Unions and public sector organisations.

Irish Telecom had been part of the Paradyn Group, which was formed in 2018 when Irish Telecom joined forces with Exigent Networks and Netforce to form Paradyn. As Paradyn increasingly focuses on end-to-end IT security and managed services, the decision was made to sell off the Irish Telecom connectivity business.

Paradyn is owned by Cillian McCarthy (CEO), Robert Norton (CTO), Paul Casey (COO) and Pat Downing (Head of Sales).

Viatel is the leading independent, Irish-owned provider of connectivity, cloud and security solutions.

The newly expanded Viatel Group now serves almost 4,000 businesses across Ireland and 28,000 residential customers.

Advisers: Venture Legal Services acted as legal counsel for Viatel in the acquisition.

Jackie Quinn of QCF Corporate Finance provided corporate finance to Irish Telecom. LK Shields, led by Emmet Scully and Lisa McEllin, with assistance from Ruairi Mulrean and Stephen Gamble, Robert Haniver and Jane O’Grady, provided legal advice to Irish Telecom.

Renatus Comment: This acquisition comes hot on the heels of Viatel’s recent acquisition of Ripplecom and looks to be a great fit for the Viatel business. As Ireland’s leading independent provider of connectivity, cloud and security solutions, Viatel looks to be the perfect home for Irish Telecom’s customers.

Source: Viatel Press Release

Deal Details: Civica, a global leader in software for public services, has acquired HR Solutions, a HR and payroll business, from Equiniti Group plc in a £13.2m all-cash deal.
Based in Belfast, HR Solutions provides payroll services across a range of markets, with the NHS among its clients. In 2019, the business processed over £4bn in payments and issued nearly three million payslips. It is expected to generate revenues of £5.9m for 2020.

UK-based Civica Group is an international software business focused on the public sector supporting more than 3,000 major customers in ten countries.

Advisers:
Sell side: Corporate Finance – Keenan CF team, led by John Reynolds and supported by James Donnelly. Legal – DWF team, led by Frank Shephard

Buy-side: Legal – Stephenson Harwood. Commercial – Teneo. Financial & Tax DD – RSM

Renatus Comment: Payroll teams have faced exceptional demands this year due to Covid-19, with furloughed employees, multiple wage support schemes, tax deferrals, etc., and quality systems have increased in importance. We’d expect this deal will not only benefit Civica, by increasing its presence in Northern Ireland, but it will also allow HR Solutions to tap into Civica’s large client base.

Source: Civica, Insider Media

Deal Details: Woodies DIY parent company Grafton Group has acquired UK-based StairBox in a deal reported to be worth £44m (c.€49m). Grafton will pay a consideration of £40m upfront and a deferred payment of £4m due in two years’ time.

Grafton Group, an international distributor of building materials. It operates c. 550 branches in the UK, Ireland and the Netherlands, is a trade focused, multi-channel distributor of construction products.

Woodies is the largest DIY retailer in Ireland, trading from 35 stores nationally and accounted for c.7.7% of Grafton Group’s revenue in 2019.

StairBox is one of the UK’s leading bespoke staircase manufacturers. It has developed a software application that enables customers to design and visualise staircases on its website.

The company reported operating profit of £6.1m off of revenue of £19.5m for the year ended 31st March 2020.

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Advisers: None Mentioned

Renatus Comment: Woodies is one of the lucky Irish retailers to somewhat fend off the disruptions caused by COVID. It has benefited from people working from home and extra spend on home improvements, as well as being one of the very few retailers permitted to keep their doors open by the government. The buying experience here reflects more and more what is happening in home products where digital is playing a part on what would have been a solely retail experience in the past.

Source: Grafton Group Press Release

Deal Details: Travel guide publisher Lonely Planet has been acquired by US digital marketing group Red Ventures for an undisclosed sum. The terms of its deal were not disclosed.

North Carolina-based Red Ventures is a portfolio of brands and digital platforms including CNET, ZDNet, TV Guide, Metacritic, GameSpot. It just recently acquired tech news website CNET for $500 million from ViacomCBS.

Most commonly known for its published guidebooks, Lonely Planet has been under the umbrella of NC2 Media since it was acquired from the BBC in 2013 for a reported £51.5m (€56m).

According to Red Ventures, Lonely Planet had produced over 150 million travel guidebooks, reaches 186 million people annually and covers 22,000 destinations around the world.

Advisers:  Michael Neary and Peter Vale of Grant Thornton Dublin advised Red Ventures on the acquisition. Grant Thornton US assisted with the transaction.

Renatus Comment: Although not an Irish deal as such, this is a great example of a Dublin-based corporate finance team being used as lead advisors on an international deal.
When the pandemic hit, like many companies, Lonely Planet announced office closures and redundancies across the group, including several at its Dublin office. As a leading guidebook travel publisher, this leaves Lonely Planet exposed to cyclical downturns in the travel industry. Now part of a larger diversified conglomerate, this will allow them to explore new publishing verticals that will safeguard them from an economic downturn in the future.

Source: Irish Times

Deal Details: Omagh-based newspaper publisher the North-West News Group (NWNG) has announced the acquisition of Belfast-based Kaizen Print. The financial consideration has not yet been disclosed.

Since 1901, NWNG has been producing some of the top selling newspaper brands in counties Tyrone, Fermanagh, and Donegal, namely the Ulster Herald and Gaelic Life. It employs 78 staff across its sites.

Headquartered in Belfast, Kaizen Print was set up in 2009 by brothers Connor and Martin McAuley. It operates two brands Kaizen Brand Evolution and Kaizen Weddings. It currently employs 30 people.

Advisers: None Mentioned

Renatus Comment: Traditional newspaper publishers are always looking for new verticals to reinvent themselves to diversify their business model’s. This acquisition is a great example of just that. Acquiring Kaizen allows NWNG to expand its digital printing creative service that will no doubt lead to revenue and cost synergies for both businesses.

Source: The Irish News

Deal Details: Cork-based residential care operator Aperee has announced its acquisition of the 64-bed Havenwood Retirement Village in Waterford.  The financial consideration of the deal was not disclosed however industry sources estimated it to be in the range of €8-€10m.

Havenwood is a family-run nursing home, founded by exiting owners Padraig and Marie Dolan in 2005.

Aperee is the operational arm of the BlackBee Healthcare Fund which is a €250m fund allocated for the development of 1,000 new state-of-the-art single en-suite beds and the acquisition of 750 existing beds. Aperee already owns and operates nine facilities in Mallow and Tralee.

Advisers: Billy Sweetman and Brendan French of PwC Wexford advised Padraig and Marie Dolan on the sale.

Renatus Comment: This has been an industry that  has seen a lot of transaction activity in the last year. Traditionally a fragmented space, investors have been attracted to the sector due to the pressing demand for beds and the lucrative underlying business model that exists. With the supply of beds a very prominent issue in Ireland, it takes funds like Blackbee, along with state support  to scale and expand their portfolio of nursing facilities to close that ever-worrying supply gap.

Source: BlackBee

Deal Details: Irish Waste has acquired MacNabb Brothers for an undisclosed sum.

Established in 1993 and based in Downpatrick, MacNabb Brothers is owned by Vincent MacNabb (MD) alongside his brothers John and Mark.

Having started out as a skip hire business, MacNabb now offers a diverse range of non-hazardous waste management services including Commercial Bin Collection, Wood Disposal and Plasterboard Recycling. Additionally, MacNabb has developed market leading capability in Kiln Grade SRF production.

Irish Waste is one of the leading waste management businesses in Northern Ireland. Owned by the McPolin family, it has a 50-year track record in the industry. It delivers a broad suite of both hazardous and non-hazardous waste management services.

Advisers: Shean Dickson Merrick provided sell-side legal advice while Michael Braniff of Baker Tilly Mooney Moore advised on the financials. John Reynolds of Keenan CF supported by Emma Louise Gilroy provided CF advisory and Carson McDowel acted on the legals.

Renatus Comment: This is another great example of the continued wave of consolidation within the waste management industry. Although still a highly fragmented market, we should see more of this consolidation play out over the next few years. It’s great to see a neighbouring family business facilitating an exit of the other through acquisition.

Source: McNabb Brothers, Irish Waste

Deal Details: Paddy Power owner Flutter Entertainment is to acquire Fastball Holding’s entire 37.2% holding, increasing its stake in FanDuel to 95%, for a reported €3.44bn. The deal is subject to shareholder approval.

The Irish group intends to pay for the deal with $2.09bn of cash and by issuing 11.7 million new shares directly to Fastball.

Gaming firm FanDuel’s current backers include KKR and Google Ventures.

Boyd Casinos, Flutter’s partner in the US, will continue to hold the remaining 5% in Fanduel.

FanDuel is a great success story for one of its co-founders and CEO, 40 year old Nigel Eccles who was brought up on a dairy farm in Tyrone.

Advisers: Goldman Sachs and Davy stockbrokers are acting as joint global coordinators and joint bookrunners for Flutter’s placing.

Darren Nangle,  Eugenée Mulhern and Isabella Spencer-Higgins of A&L Goodbody provided legal advice to Goldman Sachs and Davy.

Renatus Comment: Dublin-based Flutter, formerly known as Paddy Power and incorporating many brands including Betfair, Skybet , has leapfrogged competitors like GVC Holdings Plc in market value after buying Canada’s The Stars Group earlier this year. It’s Enterprise value is close to a staggering €30bn – big oaks from little acorns grow!

Deals in North America have been spurred by the legalisation of sports betting in the U.S. in 2018. Competition in the North American market is intensifying as companies such as BetMGM and Barstool Sports competing with FanDuel and its main rival DraftKings to capture surging demand.

Flutter shares rose as much as 14% to a record high after the announcement.

Source: Irish Times 

Deal Details: Dublin-based health and safety business ASM Group has received investment from UK-Based Testing, Inspection, Certification and Compliance (TICC) investment company Phenna Group. The financial consideration and terms of the deal have not been disclosed.

Established in 2003 by husband and wife team Jim and Karen Horgan, ASM Group is a niche Health and Safety business, offering a broad range of services to a diverse range of end markets. Amongst its range of services, ASM provides safety consultancy, HSE recruitment & resourcing, bespoke & tailored training solutions to name a few.

Headquartered in Nottingham, UK, Phenna Group’s aim is to invest in and partner with selected niche, independent TICC companies. This is the sixth such investment made by Phenna Group in 2020.

Advisers: Avonhurst (London), Johnston Carmichael and Wallace Corporate Counsel (Dublin) advised Phenna Group on the legals.

Raymond Donegan and Ailbhe Doyle of IBI Corporate Finance (Dublin) and RDJ Solicitors (Cork) provided legal advice to ASM Group.

Renatus Comment: The new funding will enable ASM to grow by expanding into new markets and explore new sectors to add new clients to its existing quality client base. The TICC industry is a highly fragmented and competitive industry. The sector has demonstrated a unique relationship with the Covid-19 pandemic. Like most industries, the pandemic has taken its toll on it. On the other hand, it is one of the key industries helping both the public and private sector to fight back.

Source: Phenna Group

Deal Details: A leading engineering consulting firm, Callaghan Engineering, has been acquired by RED, a company of ENGIE Impact, for an undisclosed sum.

Operating from Dublin and Cork, Callaghan Engineering has over 30 years of experience providing multi-discipline professional engineering design, validation, procurement, project and construction management services.

Callaghan Engineering was owned by Donal and Miriam Callaghan.

RED provides technical expertise to deliver market leading building services and ICT infrastructure engineering solutions. ENGIE Impact delivers sustainability solutions and services to corporations, cities and governments across the globe.

Advisers: : LK Shields team, led by Emmet Scully with support from Lisa McEllin and John Campbell, provided legal support to Donal and Miriam O’Callaghan. JPA Brenson Lawlor’s Corporate Finance and Tax Teams advised RED.

Renatus Comment: 30 years after founding Callaghan Engineering, this deal provides an exit for its founder Donal Callaghan and allows the business to take on a new journey with its new partners RED.

Acquisitions of service businesses like this are a neat for companies to acquire talent, broaden then service offering and take in new clients.

Source: Callaghan Engineering

Deal Details: London Stock Exchange-listed next-generation technology investment company Pires Investments Plc has invested in to DeTech Studio Limited (“DeTech”), a newly incorporated company which is developing a decentralised finance technology platform YOP. This investment will provide Pires with a 15% stake in DeTech.

Pires focuses on investment in next-generation technology companies which have potential for major transformation and exponential growth. They are active investors in IoT, Ai, Cyber Security & AR/VR.

YOP will make it easier for less technical users to engage with decentralised finance who, via the YOP app, will be able to access to, and interact with decentralised finance services in a more straightforward and user-friendly manner.

Advisers: Emmet Scully, partner in LK Shields Solicitors LLP led legal advisory on transaction assisted by Lester Sosa-Villatoro and Eric Brouwer.

Renatus Comment: Decentralised Finance (“DeFi”) is a fast-growing global suite of products running on the Ethereum network which provides solutions for the owners of cryptocurrency assets who wish to generate an investment return from their assets. The total value locked (“TVL”) into DeFi via Ethereum-based smart contracts has grown significantly over the past few months – from less than US$1 billion in May 2020 to over US$12 billion in November 2020. However, currently access to this market is relatively technical and complex and there is a market for YOP Platform that simplifies it for the user.

Source: Global News Wire, London Stock exchange.