Renatus launches graduate recruitment programme, Ornua acquires Whitehall Specialties, Sword Media acquires stake in Apps4 Web Media, CIS is acquired, and more in this week's Renatus Private Equity weekly M&A newsletter.
Renatus Weekly M&A & Company Performance Private Equity Newsletter 17/10/2021
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
RENATUS GRADUATE RECRUITMENT
We are excited to announce that we are hiring a graduate to join our team as an Associate.
We’re looking for an individual with ambition, tenacity and a love of entrepreneurs and SMEs to help us build exceptional businesses across Europe and beyond. Our small, tight-knit team means that Associates play an integral role in our activities and receive a high-degree of exposure and responsibility from day one.
This role is open to final year and graduate students available to start full-time in September 2022, or earlier if applicable.
If you, or someone you know, is interested in applying, please visit Renatus.ie/careers to learn more and apply.
Ornua acquires Whitehall Specialties
Deal Details:Irish dairy giant Ornua has completed an acquisition of Whitehall Specialties from US private equity investor Mason Wells for an undisclosed sum.
Ornua is a leader in providing dairy products to both consumers and manufacturers. Its brands include household names such as Kerrygold and Pilgrims Choice. Ornua’s chief executive, John Jordan, stated that the US is a core part of Ornua’s business which has delivered strong growth in recent years. This acquisition will see them operate new facilities in Wisconsin, Minnesota and Pennsylvania.
Cheese producer Whitehall is headquartered in Wisconsin and operates across four sites, employing a total of 450 people. Its cheese products are used across various industries and customers include operators in the food manufacturing, retail, and food services sector. Whitehall reported turnover of c. €173m last year.
Advisers: None mentioned
Renatus Comment: Ornua has experienced tremendous growth in recent years. In 2016, the business reported a turnover of €1.7bn and an EBITDA of €43m. In its most recently reported accounts to 2020, revenue was €2.3bn and EBITDA was €107m. This is an increase of 34% and 150% respectively.
Acquisitions have supported some of this growth with this week’s acquisition of Whitehall following a 2017 acquisition of F.J. Need Food Limited, a Chesire-based cheese ingredient company, and a 2016 acquisition of CoreFX Ingredients, a US-based power ingredient business.
Sword Media, founded in 2016, is primarily owned by Thimba Media Limited and Tullylough Holdings Limited and is led by founder and CEO Stephen McBrinn.
Apps4 Web Media is an organic digital acquisition business, based in the UK. It has assets in the US, Italy & UK which are primarily related to sports betting. The business is 100% owned by CEO Alex Windsor.
Advisors: Ross Little and Sean Forysth, DWF Ireland LLP, advised Sword Media on the legal terms of the acquisition and partnership.
Renatus Comment: Sports Media has built up a reputation as the ‘go to’ acquisition partner in both sports betting and casino over the last 5 years. With an existing presence in Europe and the Nordics, this deal will allow them to expand into the US for the first time. This should enhance the business’ growth prospects, with revenues in the Sports Betting industry in the US growing 174% YoY.
CIS, based in Dublin, is a leading provider of business intelligence for the construction industry throughout the island of Ireland.
Glenigan, a subsidiary of the Byggfakta Group, is a provider of construction sales leads and industry insights. Glenigan operates in both the UK and Irish markets and reported a turnover of c. £12.2m in 2019.
Advisers: Catherine Cusack and Nicola McGrath of Eugene F Collins advised Glenigan.
Renatus Comment: Glenigan and CIS offer a very similar service and were in direct competition in the Irish market. This acquisition has solidified Glenigan’s position as a market leader in both the UK and Irish markets.
Lufthansa Technik Shannon, owned by parent company Lufthansa Technik Airmotive Holdings, specialises in the overhaul of short- and medium-range aircraft. The company also offers services such as technical support and sales of material to aircraft line maintenance. It generated turnover €51.4m last year, falling from €74.1m, and pre-tax profits of €1.3m, down from €2.4m.
Atlantic Aviation, led by Chief Executive Shane O’Neill, is an independent aviation solutions company that provides aircraft maintenance, technical, design services and training. The deal will see Atlantic Aviation workforce expand to roughly 740 people across Shannon and the UK, with combined annual revenues of about €85m. As the sector recovers from the increasingly drawn-out impact of Covid-19 restrictions, the deal sees some protection of employment in the sector, with the enlarged group now offering maintenance solutions for both Airbus and Boeing, who hold a duopoly on the aircraft market.
Advisors: A Flynn O’Driscoll team of James Duggan, Declan Cunningham and Claire McDermott provided legal advice to Atlantic Aviation Group.
Renatus Comment: Atlantic Aviation is owned by businessman Patrick Jordan, who bought the company out of examinership in 2015 for €1m. Patrick Jordan previously owned Easy Access, involved in the sale and hire of formwork and scaffolding products to the Irish market, which he sold to Siteserv in 2006 before the crash. With Atlantic Aviation he has shown that his entrepreneurial skills translate across industries having taken this business from a reported €14m turnover in 2015 to €33m in 2019, which were its most recently filed accounts.
A&C is a GMP (Good Manufacturing Practices) manufacturer of custom buffer and chemical blend products used in the manufacturing of biopharmaceutical drug products.
Some of A&C’s largest customers include operators in the European pharmaceutical and biopharmaceutical industries. A&C played a key role in Covid 19 vaccine supply chains.
Aceto is a global operator in the provision of speciality materials for the life science, agriculture, nutrition and general industry markets. The company reported a turnover of c. $163.6m in 2019 and its operations span across ten countries, with its base in New York.
Advisers: None mentioned
Renatus Comment: This acquisition of A&C Bio Buffer is an example of Aceto’s goal of growing in the biopharmaceutical space. The acquisition of A&C and its state of the art facility in Limerick will enhance Aceto’s growing European manufacturing footprint and commercial presence.
Source: Contract Pharma
Aryzta’s Brazil business is acquired by Mexican multinational
Deal Details: Swiss-Irish food group Aryzta announced that its Brazil business has been acquired by Mexican Grupo Bimbo SAB de CV. The deal consideration was not disclosed.
ARYZTA, the owner of Cuisine de France in Ireland, is a global food business with a leadership position in convenience bakery.
The sale of the Brazil business concludes Aryzta’s disposal programme and will allow the company to agree new loan facilities.
Grupo Bimbo has presence in over 33 countries and has annual sales volume of $15bn.
Advisers: None mentioned
Renatus Comment: Aryzta’s continuing business EBITDA has fallen by over a half since FY15 (predominantly as a result of contract losses, commoditisation and recently COVID-19). This disposal is a continuation of Arytza’s simplification strategy. In March 2021, it announced the disposal of its North American business for $850m. With pressure on global energy prices and labour shortages Aryzta will need to manage contract renewals and tenders carefully to ensure margins are not eroded to gain investor confidence.
DEAL UPDATES & OTHER NEWS
Joe Duffy to acquire Munster Ford dealer
Deal Details: JMD Automotive Group, based in Dublin, is to acquire CAB Motor Company Limited. The deal is subject to CCPC approval.
JDM Automotive Limited is the holding company for the Joe Duffy Automotive Group. The group is a partner with brands including Audi, BMW, Ford, Jaguar, Kia, Land Rover, Mazda, Mini, Porsche, Volkswagen and Volvo.
CAB is the largest dealer of Ford vehicles in the Munster region. Accoridng to latest filings in 2019, CAB employs about 50 staff and has reported net assets of €6.4m and valued its showroom at €4.3m.
Glennon Bros UK completes Balcas Ltd. acquisition
Deal Details: The CCPC has cleared the acquisition of Balcas Limited by Glennon Bros UK Holdings Limited.
Glennon Bros UK Holdings Limited, trading as ‘Glennon Brothers’, is active in the Irish timber processing industry with two timber processing facilities in Longford and Fermoy, Co. Cork. It supplies sawn timber products to a number of sectors.
Balcas Limited is a subsidiary of SHV Energy (LPG) Holdings BV. It operates in both the State and in the UK. Balcas is split into two primary units, Balcas Timber and Balcas Energy, producing sawn timber products, wood pellets and generating green electricity & heat.
ERAC to acquire Walker Vehicle Rentals
Deal Details: ERAC Ireland Limited, a provider of car rental, car sharing, fleet management and other transportation solutions is to acquire Walker Vehicles Rentals Limited.
Walker Vehicle Rentals Limited was founded in 1991 as a small van rental provider in Dublin. The business has grown to a nationwide provider of commercial vehicles for rent with a fleet of over 1250 vehicles and operations in five locations.
The deal is currently awaiting approval and under preliminary investigation by the Competition and Consumer Protection Commission.
Simply Blue joint venture with Total Energies
Deal Details: Simply Blue Group (SBG) is set to form a partnership with a global multi-energy company TotalEnergies. Cork-based Simply Blue has more than 3.2 GW of offshore wind in development off Ireland and the UK.
TotalEnergies has over 6 GW of offshore wind in development around the globe, of which over 40% is comprised of floating offshore wind including over 2 GW of floating wind projects in South Korea.
Advisers: Feilim O’Caoimh, Jamie Woodcock, Elaine Traynor, and Amy Herbert of Fieldfisher advised long-term client Simply Blue Group.
Source: Fieldfisher; Irish Times
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 businesses EBIT or EBITDA less average Capital Expenditure are often better measures. YoY is an acronym for the year-on-year movement in turnover, EBITDA, etc.
Louth-based Condon Engineering Limited was founded in 1993 by Tom Condon. It has since grown to become one of Ireland’s leading agricultural manufacturers, supplying everything from cubicle housing to drinking troughs.
In the financial year to December 2020, Condon Engineering reported revenues of c. €16.4m, which converted to EBITDA of c. €3.2m, an increase YoY of 19.6% and 55.4% respectively. EBITDA growth is attributable to both the increased turnover figure, and increased gross margins, up from 17.9% in FY19 to 22.9% in FY20. The business finished the year with a cash balance of c. €4.5m, an increase of c. €2.8m YoY.
Condon Engineering Ltd is wholly owned by James, Graham and Keith Condon. The business employed an average of 68 people, at a total cost of c. €1.8m.
Castle Electrical Factors Ltd, trading as City Electrical factors (CEF), is a Dublin-based wholesale distributor of electrical appliances, equipment and tools throughout Ireland through its 13 branches.
CEF reported a turnover of c. €31.4m which converted to an EBITDA of c. €2.7m, representing an increase of c. 3.3% and c. 15.0% respectively. The business’ largest post-EBITDA cash movement was loan repayments of c. €2.4m after which there was a positive cash movement of c. €126k during the year. CEF closed the year with net cash and cash equivalents of c. €2.8m.
The business employed an average of 77 people throughout the year at a cost of c. €4.6m.
What: The $3m (€2.59m) round was led by PROfounders, a London-based early-stage VC fund. Ada Ventures, Connect Ventures, Ascension and SCNE. Several strategic angel investors also participated. The start-up raised an initial $650k (€561k) last year with backers in a pre-seed funding round led by Boost VC.
Why: The funding will be used to continue to develop the SideQuest platform.
What: More than €2m was raised in a seed funding round.
Why: The purpose of funding was not disclosed, however, it is believed to be used for expansion.
Source: Irish Times
Who: Five Enterprise Ireland-backed start-ups: AVeta Medical, Akara Robotics, CrannMED, Contego Sports and ProVerum have secured funding.
What: These companies have secured a total of €20.5m in funding from the European Innovation Council Accelerator (EIC) program in Horizon Europe. Over 2,700 applications were submitted to this program which has allocated more than €360m in funding to a total of 65 companies.
Why: The EIC accelerator is aiming to support companies pursuing ‘game changing’ innovations.
Source: The Irish Times, TechCentral
Who: Irish-founded fintech start-up Finbourne has raised funding. Finbourne has two cloud-based products, Luminesce and Lusid, which help investment firms to integrate and manage their existing software systems. The business was established by Tom McHugh and Dermot Shortt.
What: Finbourne raised investment from the London Stock Exchange Group after it started using its Lusid product. The quantum of funds raised was not disclosed. However, Finbourne raised a reported £15m in a series A round just two months ago.
Why: The specific use of funds was not disclosed.
Source: The Sunday Independent
EXECUTIVE AND BOARD APPOINTMENTS
We in Renatus believe that more important than the deals are the people so on a weekly basis we have decided to provide you with details of key recent executive and board-level appointments.
An interesting narrative that has developed recently has been the counter intuitive fortunes of Pfizer’s equity valuation.
After the pharmaceutical gold rush that was the race to find a vaccine in late 2020, one would have assumed that the winner’s public valuation would skyrocket.
There was a clear winner of the race: Pfizer. It was the first to market and the vaccine of choice for nations around the world. It is reportedly on pace to deliver 3bn doses this year and another 4bn next year. However, it has not resulted in valuation growth that we would have expected.
When we compare share price growth of the vaccine manufacturers from January 2020, pre-Covid, to today, we find:
Pfizer: + 12.5%
BioNTech: + 518.5%
Astrazeneca: + 14.4%
Moderna: + 1,616.3%
The S&P 500: + 38.22%
The vaccine has certainly boosted Pfizer’s revenues, with Q2 2021 revenues growing by 86% to $19bn, with Covid-related revenue being $7.8bn. However, investors appear concerned about the sustainability of Covid-related revenue, increasing vaccine competition and the performance of Pfizer’s core business.
Nonetheless, something seems misaligned when Pfizer are the white knight for global capitalism yet underperform the index.
The Irish Government’s gross debt as a percentage of GDP for 2020, standing at c. €218bn. @CSOIreland
10.6% & 10.1%
The YoY increase in the Irish agricultural output and input price indices, respectively, for August 2021.@CSOIreland
The rate of the national annual commercial construction inflation, which is based on non-residential projects. According to the Society of Chartered Surveyors Ireland (SCSI).
The rise in used car prices versus January 2020, before the onset of the Covid-19 pandemic, according to @DoneDeal
The increase in the number of passengers traveling through Dublin airport in August 2021 compared to July 2021, according to the @CSOIreland
Car traffic volumes in Dublin in August 2021 are now at 91% of August 2019 levels, according to the @CSOIreland
The YoY increase in the Irish consumer prices for September 2021, the sharpest level of growth since 2008. @CSOIreland
The number of direct ferry routes between Ireland and France, rising from 12 routes pre-Brexit. @RTEbusiness
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Renatuswas 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:
Growth financing – both organic and acquisition growth financing