Renatus Weekly M&A & Company Performance Private Equity Newsletter 14/08/2022

Deal Details: Cloud and cyber security specialist Ekco has acquired Unity Technology Solutions. Deal consideration has not been disclosed.

Ekco is an Irish cloud and cyber security specialist offering cloud solutions and cloud management services. The business is headquartered in Dublin and was founded by Eoin Blacklock and Johnathan Crowe in 2017. In FY20, the business had a reported turnover of c. €20.3m. Along with management, shareholders include Pageant, ACT, and Sencheer Holdings, a Lochlann Quinn and Quinn family investment entity which is led by Donal Quinn.

Unity Technology Solutions is a Dublin-based cloud solutions partner, specialising in selling cloud and cyber-security services to other businesses. The business was founded in 2002 as Calyx but rebranded in 2011 and was owned and led by David Hargaden, CEO. In FY21, the business had a reported turnover of c. €12.2m, which converted to an EBITDA of c. €1.6m.

Advisers:
Unity:
Corporate Finance: EY led by Martin Treacy, Michael Murphy and Jonny Forde.
Legal: Flynn O’Driscoll led by David Ryan, Declan Cunningham, Elaine Cully.
Tax: BDO led by Ciaran Medlar.

Ekco:
Corporate Finance: an internal team of Eoin Blacklock, Jonathan Crowe & Steve MacNicholas.
Legal: Dentons led by Shane O’Donnell and Ciaran O’Boyle along with Niall McCooey Ekco’s General Counsel.
FDD & TDD: Deloitte.

Renatus Comment: Ekco is pursuing a strategy of growth through acquisition having completed almost 20 acquisitions since it was founded in 2017. Ekco co-founders, Eoin Blacklock and Johnathan Crowe did this before having built up KeepItSafe technology group for NASDAQ-listed parent J2 through the same acquisitive strategy. During this time, J2 made over 50 acquisitions. This latest acquisition follows a €20m fundraising round late last year.

David Hargaden has built up Unity and has had an amazing career over the years. Alongside his professional career he was Chairman of MyHome, Car Trawler, and a very influential director in Ding – all during their early growth chapters.

Source: The Irish Times

Deal Details: The Park Rite-owner Tazbell Services Group is to be acquired by Q-Park. Deal consideration has not been disclosed and the deal is subject to approval by the Competition and Consumer Protection Commission (CCPC).

Tazbell Services Group is an Irish outsourcing company offering services to both public and private clients. It owns businesses such as Park Rite, a commercial car park operator and toll collection service provider managing c. 50k on-street parking spaces for local authorities. The business was established in 1982 as Park Rite, an asset management company and has since expanded and diversified. In FY20 it had a turnover of c. €17.0m, which converted to an EBITDA of c. €1.6m.

Q-Park is an operator of carparks across Belgium, Denmark, the Netherlands, Germany, France, Ireland, and the UK. In total, it controls over 800k parking spaces in c. 3.5k different locations. It was founded by Ward Vleugels in 1998 and is headquartered in Maastricht, Netherlands. Frank De Moor has led the business as CEO since 2014. In FY21, the business had a turnover of c. €526.4m. Since being acquired by KKR Infrastructure in 2017 in a deal reported to be worth c. €3bn, Q-Park has offloaded its Nordic arm to Japanese Plc, Sumitomo for c. €400m and acquired a Dutch parking operator, P1.

Advisers:
Tazbell:
Legal: Flynn O’Driscoll led by Cian O’Leary, John Darby, Pat Flynn, Majella Lynch, Aonghas Keane and Daniel Hackett.
Corporate Finance: Deloitte led by Jan Fitzell, Paul O’Neill and Ross O’Riordan.

Q-Park:
Legal: Addleshaw Goddard led by Deborah Kelly, Niall Marren, Eoghan Ó hArgáin, Frances Colclough, Maura Connolly and Katie Dempsey.
Corporate Finance: Rautenberg led by Philipp v. Hochberg, Maximilian Gailer and Marcel Müller.

Renatus Comment: Increasing urbanisation in the Irish market appears to be driving demand for car parks. Ireland’s share of urban population as a percentage of the total population has been increasing year-on-year since 2010 and currently sits at 63.65% while the total population has also grown significantly. This paired with urban expansion and development, will likely drive market growth for Irish car park operators.

Source: The Irish Times

Deal Details: Complete Laboratory Solutions has been acquired by the Phenna Group. Deal details have not been disclosed.

Complete Laboratory Solutions (CLS) is a provider of sampling, analysis and fully trained micro and analytical analysis to the food, environmental, medical device, biopharmaceutical and pharmaceutical sectors. The business is based in Galway with laboratories in Galway City and Ros Muc. It was founded in 1994 by Evelyn O’Toole and she has led the business since. In FY20 the business had a turnover of c. €12.3m, which converted to an EBITDA of c. €1.8m. The business is owned entirely by Evelyn O’Toole.

Phenna Group invests and partners with businesses that focus on the Testing, Inspection, Certification and Compliance (TICC). It was founded in 2018 by Paul Barry who leads the company as CEO. He also owns part of the business alongside Harry Hansen, Eric D’orio, Brendt D’orio, Christen D’orio and David George Harrison. It is UK-based and is headquartered in Nottingham. In FY20 the business had a turnover of c. £38.8m which converted to an EBITDA of over £11.3m.

Advisers:
CLS:
Corporate Finance: IBI Corporate Finance led by Raymond Donegan, Sarah Grouse and Ailbhe Doyle.
Legal: HOLMES led by Stephen Walker and Melissa Regan.

Phenna:
Legal: Avonhurst led by Emmanuel Amos and Thomas Mawson.

Renatus Comment: Unlike most businesses, the COVID pandemic accelerated the growth of the laboratory services industry. CLS’s perfectly situated location at the epicenter of the Irish medical device cluster with easy access to over 300 medical companies created a huge opportunity for the business.

Evelyn O’Toole and the management team at CLS are a great example of a business that poised itself for growth and successfully executed with the business’s revenue growing from c. €8.8m in 2018 to almost €12.3m in 2020.

Source: Phenna Press Release

Deal Details: Greatech Limited is to acquire a majority stake in Kaon Automation Limited for an undisclosed sum.

Kaon Automation Ltd designs and builds custom automated machines for medical device, automotive, electronic, and consumer goods manufacturing companies. It is also involved in the life sciences industry specialising in pharmaceuticals and medical devices. The business was founded in 2005 by majority owners Fergus Hynes and Garreth Finlay and is headquartered in Sligo. The business does not publish turnover or EBITDA information.

Greatech Technology is an automation solution provider in the area of factory automation. It manufacturers solar panels, electric vehicles, medical devices, smart devices, computers and computer peripherals. The company was founded in 1997 by Tan Eng Kee and Khor Lean Heng, who still lead the business. It is headquartered in Malaysia. In FY22 the company had a turnover of c. €82.1m, which converted to an EBITDA of €26.9m.

Advisers: None mentioned.

Renatus Comment: Kaon is another example of an Irish business that has grown out of serving the booming medical market in Ireland and another example of a foreign buyer acquiring an Irish business. We in Renatus recently looked back at all M&A activity in the first 6 months of 2022, we found that of the 226 deals completed, 90 were foreign buyers acquiring Irish businesses which was the highest single category. It is testament to the strength of the domestic industry and companies within it.

Source: Capital IQ

Deal Details: McCambridge’s Foodstore has been acquired by Musgrave Group. Deal consideration has not been disclosed.

McCambridge’s Foodstore is a deli, wine outlet and restaurant located on Shop Street in Galway City. The family business was founded in 1925 and has been passed through three generations. The business was founded by George McCambridge and Francis Brennan. George McCambridge’s grandson, Eoin now runs the business and was the majority owner. It does not publish turnover or EBITDA. The business currently employs 34 staff, all of whom will remain in the business following the acquisition.

Musgrave Group is an Irish food retail, wholesale and foodservice company. Musgrave Group was founded in 1876 in Cork and now owns 11 food and beverage brands. In FY21 the business had a reported turnover of c. €4.5bn, which converted to an EBITDA of c. €163.7m.

Advisers:
Musgrave Group:
Deal Advisory: KPMG.
Legal: Eversheds.

McCambridge’s:
Corporate Finance: Cantwell Corporate Finance Limited led by Paul Cantwell.
Tax: Coll & Co.
Legal: Sheehan & Co.

Renatus Comment: The Musgrave Group appears to be expanding into the higher end of the of the food retail industry with the acquisition of Donnybrook fair in 2018 and this latest acquisition of McCambridge’s, a local icon synonymous with quality food. Interestingly, there is no SuperValu in Galway City centre which is hard to believe given SuperValu’s national footprint.

Source: Galway Advertiser

Deal Details: The family-run retailer, Creightons, has acquired JD Hunter & Co Supermarket for an undisclosed sum.

The Creighton family owns and operates three independent businesses under the SPAR and EUROSPAR brands across Antrim. Founded by WG Creighton in 1936, the business is now owned by Niall Creighton and Gail Boyd who lead the business. The Finaghy store in Belfast is the business’s headquarters which offers a deli, post office, florist, car wash, food store, and 24-hour fuel station. The business reported FY21 revenue of c. £22.6m which converted to an EBITDA of just over £2.0m.

JD Hunter & Co is a supermarket based in Co. Armagh. The business was founded by JD Hunter in 1920 and remained in the Hunter family until 2019 when the Henderson Group took over the business. The Henderson Group includes Henderson wholesale, retail, food service, and property. In FY21 JD Hunter & Co had a turnover of c. £15.0m, which converted to an EBITDA of c. £583k. The current 145 employees will remain in the business following the acquisition. The Henderson Group reported FY20 revenue of almost £1.0bn which converted to an EBITDA of over £50.0m. This acquisition of JD Hunter & Co brings the total number of Creighton family operated stores to four. Both businesses are family run and JD Hunter & Co will likely fit well within Creighton’s existing brand.

Advisers: None mentioned.

Renatus Comment: The food supply chain has historically operated on very tight margins. As grocery inflation reaches record highs (latest figures estimate this to be 10% year-on-year as of July) pressure will likely be felt hardest by the smaller players in the market, which could be a catalyst for consolidation.

Source: Belfast Telegraph

Comer brothers to acquire a majority stake in Waterford Airport

Deal Details: Galway-born Comer brothers have agreed to pay up to reported €20m to acquire a majority stake in Waterford Airport.

With assets spread around Europe and more than €1 billion in Irish real estate interests, Brian and Luke Comer of The Comer Group are among Ireland’s most active and successful investors.

Since 2016, Waterford Airport has not operated any regularly scheduled commercial flights; instead, it serves as a base for private and search-and-rescue aircraft. William Bolster was the majority shareholder and other shareholders included Waterford, Kilkenny and Wexford County Councils as well as Dawn Meats and Coolmore Stud.

Following the acquisition William Bolster is set to retain a significant minority stake and be closely involved in the development plans, other shareholders stakes will become diluted.

Source: Irish Independent

Based in Craigavon, Co. Armagh, CP Animal Feeds Limited, the holding company of Mason’s Animal Feeds Ltd, is a provider of a wide range of animal feeds to customers throughout Ireland.

Mason’s reported an FY21 turnover of c. £35.8m which converted to an EBITDA of c. £3.0m, representing a 24.2% and 51.8% increase respectively. This relative outperformance in EBITDA was driven by an improved gross margin which increased from 15.9% in FY20 to 17.8% in FY21.

Significant post-EBITDA cash movements included a working capital investment of c. £1.7m and the purchase of fixed assets of c. £700k. The business closed FY21 with a net cash balance of c. £2.1m. The business is owned by Colin and Grace Purdy and employed an average of 41 employees at a cost of c. £1.5m in FY21.

P.A. McKeever Limited (T/A McKeever Chemists) is a group of over 30 chemists located across Northern Ireland and the UK. It also operates an online store. The business was established by Paul McKeever in 1999 who has owned and led the business since.

For its financial year to July FY21, McKeevers Chemists reported turnover of c. £39.6m, a 12.1% increase year-on-year. This converted to an EBITDA of c. £4.4m, a 38.2% increase year-on-year. This significant increase in EBITDA is largely attributable to increased gross margin, rising from 29.3% to 31.5%.

The business finished the year with a closing cash balance of c. £1.8m. Significant post-EBITDA cash movements included the acquisition of tangible assets amounting to c. £2.5m and loan repayments of c. £1.6m. P.A McKeever acquired Peter Jamieson Limited throughout FY21 which operates a pharmacy Lancashire, UK.