Keywords Studios acquires LabCom, Horizon Therapeutics acquired by Amgen, BHP Insurance acquired by PIB Insurance and more in our latest newsletter.
Renatus Weekly M&A & Company Performance Private Equity Newsletter 18/12/2022
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
THOUGHT OF THE WEEK
All of us elves in Renatus are signing off our M&A newsletter duty for the year.
We think Covid reminded us of the fragility of our freedom and the war the fragility of peace. The markets have reminded us that trees do not grow to the sky. Our health and freedom are our wealth. Christmas is a great time to switch off and reflect.
We have been very lucky in Renatus to partner with nine great business and leadership teams. Thankfully they all have low to no debt and high to exponential ambition. We are privileged to be sharing the growth journeys with them and are grateful to all our investors for believing in us to go on these amazing journeys. You are receiving this email as you are a key stakeholder in our world, and we thank you for being a great neighbour.
For those of you with some late shopping to do we have some gift suggestions:
For those who cannot keep their feet on the ground, a session on a simulator where you’ll be able to take off and land at an airport of your choice. Experience different weather conditions and be in total control of a 65-tonne aircraft at Simtech.
If any farmers in your lives are spending far too much time on pen and paper compliance, buy them a subscription to Herdwatch.
We have lots of B2B offers too that may not fit in a stocking!!
Have a happy and healthy Christmas and our thoughts are with all those who have lost loved ones during the year.
Keywords Studios acquires LabCom
Deal Details: Keywords Studios has acquired LabCom for an initial €1.0m in cash.
Keywords Studios is an international technical and creative services provider to the global video games industry. It was founded in 1998 by Giorgio Guastalla and Teresa Luppino and is headquartered in Dublin. The company went public in 2013 and is currently led by Bertrand Bodson. The business had FY21 revenues of c. £432.7m, which converted to an EBITDA of c. £72.8m.
LabCom is an Italian company that offers PR and digital communications advice, social media management, data-driven influencer campaigns and brand partnerships. It was established in 2005 by Marco Giannatiempo. Based in Milan, its customers include tier-one video game developers Riot Games, Konami and Bethesda. In FY Dec 21 it reported revenue of c. €1.6m.
Advisers: None mentioned.
Renatus Comment: Last week we covered Keywords Studios’ acquisition of US firm Helpshift for up to $75m. It also acquired Smoking Gun International and Mighty Games in recent months. The company has been extremely active in its acquisition policy since its IPO in 2013, approaching 60 deals completed. Its share price is up over that period from €1.70 to €31.40 as of December 16th. Having previously worked with LabCom, Keywords Studios is familiar with its service offering. This bolt-on is highly complementary and will greatly improve its PR, marketing and communications offering to clients in gaming and other industries.
Source: Irish Times
Horizon Therapeutics acquired by Amgen
Deal Details: Amgen has agreed to acquire Horizon Therapeutics in a deal worth c. €26.8bn.
Horizon Therapeutics is a biopharmaceutical company focused on researching, developing, and commercialising medicines that address critical needs for people impacted by rare and rheumatic diseases. It was founded by Tim Walbert in 2008 and is headquartered in Dublin. Horizon Therapeutics PLC became a publicly traded company on the Nasdaq in September 2014, following Horizon Pharma’s acquisition of Vidara Therapeutics plc. Horizon Pharma was originally listed in 2011, becoming Horizon Therapeutics following the deal. In FY21 the business had turnover of c. €2.7bn, which converted to an EBITDA of c. €534m.
Amgen is a US-based biotechnology company that uses living cells to make biologic medicines, leading and guiding the biotech industry. It was founded in California in 1980 and is led by CEO, Robert A. Bradway. The business has been publicly listed since 1983. In FY21 the business had a turnover of c. €22.0bn.
Advisers: Horizon Therapeutics: Legal: Matheson led by Corporate M&A partners David Fitzgibbon and New York-based partner David Jones. Financial Advisors: J.P. Morgan & Morgan Stanley.
Amgen: Legal: William Fry, alongside Sullivan & Cromwell LLP. Financial Advisor: PJT Partners led by Paul Taubman, Tom Davidson and Basil Geoghegan and including Kush Nanjee and Dan Lee.
Renatus Comment: Horizon Therapeutics announced it was in talks with Amgen, Sanofi and Johnson & Johnson over a possible acquisition at the end of November. Both Johnson & Johnson and Sanofi backed out of the deal, citing the price as being above their valuation criteria. Amgen offered $116.50 per share, a premium of 19.7% on the closing price on December 9 and a 47.9% premium on the closing price on November 29.
Source: Irish Times
BHP Insurance acquired by PIB Insurance
Deal Details: BHP Insurance has been acquired by PIB Insurance Group. Deal details have not been disclosed.
BHP Insurance is a non-life insurance broker in the not-for-profit sector and operates across the community & voluntary, social housing and charity sectors. Based in Dublin, BHP was originally recapitalised in 2018 by John Hannon and John Lacy with support from Duke Royalty and Martina Westphal became MD of the group at that time. Melior Equity Partners took a significant majority stake in mid-2021, acquired KMW and invested significantly in the business to drive organic growth. In FY21 the business had turnover of c. €2.0m.
PIB Group Limited is a group of insurance advisory businesses providing advisory, analytics, claims management, premium funding, and risk management solutions. The business was founded in 2015 by Brendan McManus and is backed by private equity firm Apax Partners. It is headquartered in London. In FY21 it recorded a turnover of c. £230.9m, which converted to an EBITDA of c. £44.5m.
Advisers: PIB: Legal: A DLA Piper team of Matthew Cole and Maria Hickey. FDD: PWC, led by David Connolly, supported by Aodhan Cannon, John Casey, James O’Neill and Cathal Nolan. TDD: A PWC team of Ronan Mac Nioclais, Alanna O’Doherty and Shane Kavanagh. Reg DD: A PWC team of Paraic Joyce and Michael McInerney.
BHP Insurance: Legal: William Fry led by Stephen Keogh and Alex Reynolds. Deal Advisory: Deloitte led by Anya Cummins, including Denis Murphy, Julie Worthington, Darian Rogerson and Rushil Tandon. Tax: KPMG led by Alan Bromell and Nicole Constant.
Renatus Comment: The consolidation trend within the insurance industry has been ongoing over the last number of years. PIB Group only finalised its first Irish acquisition last year; however, it is quickly becoming one of the most active consolidators in the space, with BHP Insurances being its ninth deal in the Irish market thus far. Other acquisitions carried out by PIB Group include Sheridan-Colohan, Mike Murphy Insurance, Sullivan Insurances, Fingal Insurance Group, and Alan Tierney & Partners.
This exit represents the first exit for Melior Equity Partners from its new fund. An 18 month hold period is shorter than normal for private equity but they are clearly taking advantage of what is a hot market at the moment.
Deal Details: Rockpool Investments has exited Fortus in a transaction backed by AIB Equity Capital. Deal details have not been disclosed.
Fortus is a provider of security equipment and monitoring services within the CCTV, fire, intruder detection and access control product verticals. It was founded in 2007 by Brian Honan and is headquartered in Dublin. The group has simultaneously completed the acquisitions of Specialised Security Products, based in Hertfordshire and Red Rhino Monitoring. The group also has one further acquisition in the gate automation space closing imminently. This will take the group’s overall revenues to c. €115m.
Rockpool is a London-based private company investment specialist.
Advisers: Rockpool: Legal: Taylor Wessing UK
Fortus: Legal: Eversheds Sutherland Tax: PKF International
AIB: FDD: PKF International Corporate Finance Legal: McCann FitzGerald LLP and Maples CDD: Rathbone Results Limited
Renatus Comment: Fortus has ambitions to become the largest security and fire supply chain business in the UK and Ireland through a buy-and-build strategy. Since being backed by Rockpool in December 2019, the Group has acquired Enterprise Security Distribution and Re:Sure Intelligence Limited. Both diversifying it away from its current CCTV focus into adjacent sectors.
Following Rockpool’s exit, the Fortus management team, led by CEO Mark Brophy, supported by AIB, will continue the company’s consolidation of the security market with further strategic acquisitions lined up in the UK and Europe.
Source: Fortus Press Release
S&W moves to Employee Ownership Trust
Deal Details: S&W Wholesale to hand ownership to its employees in the new year under an Employee Ownership Trust model.
S&W Wholesale is an independent wholesale business covering confectionary, soft drinks, grocery, non-food grocery, chilled, fresh and frozen. The business began as Newry Cash & Carry in 1916 and merged with J&E Whitten in 2000 to become Savage and Whitten or S&W as they are known today. It is headquartered in Newry. In FY21 the business had turnover of c. £124.9m, which converted to an EBITDA of c. £6.4m.
Advisers: S&W: Deal Advisory: Danske Bank
Renatus Comment: This is one of the few Employee Ownership Trust deals in Northern Ireland, although the legal structure is widely used in other parts of the UK. The Employee Ownership Trust model was introduced by the UK government in 2014 and enables employees to become indirect shareholders of a business.
The obvious attraction of such a model is the greater long-term alignment of management and employees, with Arup being one of the pioneers of the model. The initiative is also supported by a host of other UK firms, including John Lewis Partnership and Santander. Interestingly, S&W cited the desire to avoid being swallowed up by a bigger player or bought by a closed investor as a key rationale for adopting the model.
Source: Irish News
Gradguide acquired by Native
Deal Details: Gradguide has been acquired by UK technology company, Native. Deal details were not disclosed.
Gradguide was founded by its chief executive, Mark Hughes in 2019. Gradguide is a mentorship and events platform that helps students and graduates get jobs in the world’s leading companies. There are over 20,000 students signed up to the platform. It received €2.0m in equity investment from Terry Clune’s CluneTech in 2021. The business had €122k of turnover in FY21.
Native is a similar platform which was designed to connect students with university ‘experiences’ and helps advertisers and student unions reach consumers. It is led by CEO, Nick Musto.
Advisers: None mentioned.
Renatus Comment: Gradguide has grown to play an increasingly important role in the graduate recruitment process in Ireland, supporting an already blossoming tech sector in the country by ensuring prospective graduates are equipped to put their best foot forward when interviewing for their first graduate positions. The company has essentially taken the unique step of reverse-engineering the graduate recruitment process, with its mentorship seeing its graduates secure roles with companies such as Wayflyer, Oracle and HubSpot, to name but a few. The success of the platform is best encapsulated by its growth from having just over 500 students in early 2021, to now over 20,000 at the time of writing.
Source: Irish Independent
Phenna Group acquires Maurice Johnson & Partners
Deal Details: Phenna Group has acquired Maurice Johnson & Partners for an undisclosed sum.
Phenna Group is a global provider of testing, inspection, certification, and compliance services. Based in Nottingham in the UK, the business had FY21 turnover of £81.5m, which converted to an EBITDA of £17.2m. The business was co-founded by Paul Barry and David Harrison and is backed by Oakley Capital and Inflexion Private Equity.
Maurice Johnson & Partners provides safety engineering and access consultancy services in Ireland. The business has offices in Dublin, Cork and Letterkenny. The business does not report turnover or EBITDA information.
Advisers: Phenna Group Financial: Johnston Carmichael Legal: Wallace Corporate Counsel
Michael Johnson & Partners Corporate Finance/ Tax: Quintas, led by Dave O’Brien. Legal: RDJ led by Bryan McCarthy
Renatus Comment: Phenna Group has achieved significant scale at a blistering pace over the last few years, with its revenues growing at 100% CAGR in the 3 years through 2022. This scale has been achieved by a well-executed acquisition strategy, which has seen Phenna Group take advantage of the fragmentation of the fire, cyber security and ecology testing spaces by acquiring a number of smaller players in the market. Utilising the significant growth investment the business has received over the past few years, the business has completed 35 investments across Europe, US, Asia and Africa. Ireland has formed a key part of this strategy, with 5 of Phenna’s investments having been in Irish companies.
Source: Phenna Group Press Release
DEAL UPDATES & OTHER NEWS
SYS Group enters strategic partnership with PGM Financial Services
Deal Details: SYS Group has announced a strategic partnership with PGM Financial services, the combined entity will trade as SYS Group and brings the total assets under partnership to over €300m.
SYS Group is a Tipperary-based financial services provider that specialises in retirement planning, investments, inheritance and tax efficiency. The business is headquartered in Nenagh and has offices in Dublin, Cork and Waterford. The business was founded by Tony Delaney in 2015 and currently employs c. 40 staff. In FY21 the business had turnover of c. €1.5m.
PGM Financial Services is a financial advisory firm that offers advisory services to both personal and business clients. The business was founded by Patrick McEntee in 2005 and is headquartered in Dublin. In FY21 the business had turnover of c. €380k.
Source: Irish Examiner
Uniphar acquisition blocked by CCPC
Deal Details: Uniphar’s acquisition of Navi Group will no longer close after being blocked by the Competition and Consumer Protection Commission. Both parties will continue to work together.
Uniphar is an international healthcare services business with over 200 customers in the pharmaceutical and MedTech industries. Uniphar was established following a merger between United Pharmacies Co-Op and Allied Pharmaceutical Distributors in 1994. The business is headquartered in Dublin and was listed on Euronext Dublin and the London Stock Exchange in 2019. In FY21, the business reported turnover of c. €1.9bn, which converted to an EBITDA of c. €86.5m. The business has a workforce of over 2,900 staff dispersed throughout Ireland, the UK, Benelux, Nordics, Germany, Switzerland, and the USA.
Navi Group is a pharmacy solutions business which specialises in product buying and trading and the provision of IT and retail franchise services to pharmacies. The business was founded in 2019 and is headquartered in Dublin. It is owned by CEO John Carroll and executive chairman Simon Healy. In FY21 the business had turnover of c. €33.4m, which converted to an EBITDA of c. €7.0m.
Smarttech247 valued at €42.7m in IPO
Deal Details: Smarttech247, a Cork-based cybersecurity company, has been listed on London’s Alternative Investment Market (AIM) on Thursday after raising c. €4.26m in a placing that gives the firm a market capitalisation of c. €42.7 million. The business originally intended to list via a reverse takeover including Conduity Capital but subsequently rejected the plan in favour of a direct IPO. Smarttech247 is a managed detection and response company that provides threat intelligence with managed detection and response to provide actionable insights, 24/7 threat detection, investigation and response. It was founded by Ronan Murphy in 2008 and is led by Raluca Saceanu. Turnover or EBITDA information is not reported.
Source: Business Post
Cyclone Corporate Services Group is a courier and delivery services provider that operates a group of companies offering services such as logistics, storage, courier, document shredding and office supplies. The business was founded in 1997 and is headquartered in Dublin. It is owned by Kevin Oliver, Edmond Moloney, John Martin, Simon Pleass, Loretta Graham and Keith McGrory.
In its financial year to December 2021, Cyclone reported turnover of c. €13.4m, a 19% increase year-on-year. This converted to an EBITDA of c. €2.2m, a 61.0% increase year-on-year. The rise in EBITDA is mainly attributable to the increase in revenue and gross profit margin rising from 54.5% to 57.0% year-on-year.
The business finished the year with a cash balance of c. €4.9m, a €4.0m increase over the year. Significant post-EBITDA cash movements included the purchase of tangible fixed assets, along with an inflow of cash from the sale of investment properties.
The company employed an average of 123 people over the year, at a cost of c. €6.8m.
Michael Cooney & Sons Ltd. is an operator of five Homevalue DIY and hardware stores in Mayo, Roscommon and Galway. It is owned by Brendan, Padraic & Gerard Cooney.
In its financial year to December 2021 the business generated turnover of c. €19.5m, an increase of 19.7% year-on-year. This converted to c. €2.0m EBITDA, an increase of 31.0%. The increase in EBITDA was driven by gross margin improvement.
The business finished the year with a cash balance of c.€0.6m, a c. €1.1m decrease on FY20. This was due to significant investment in working capital.
The business employed a total of 56 people during the period at a total cost of c. €2.2m.
Who: EQTEC plc, a Cork-based bioscience energy company that licenses and sells its proprietary gasification technology that generates green energy from waste, biomass, and plastics.
What: The business has raised €2.34m in an unsecured loan facility agreement with Altair Group.
Why: EQTEC plc will use the proceeds for general working capital, acceleration of project sales and technology deployment, in particular for its Market Development Centres.
Who: Airborne Capital, an Irish aircraft lessor that manages aircraft worth a total of c. $2bn.
What: The business has raised €285.6m against 15 of its aircraft in partnership with Marathon Asset Management.
Why: The asset-backed securitisation will allow Airborne to release cash tied up on the aircraft through the bond issue, whose holders will be repaid using the aircraft leasing revenue.
Who: Greentech Holdings, an Irish company operating a marketplace for CBD products.
What: The business has raised €500k in funding from investors.
Why: The investment will be used to develop a new e-commerce platform that trades via cryptocurrency tokens.
Source: Sunday Business Post
Who: Jaid, a business offering AI as a Service solutions to automate a variety of use cases, such as client service and sales automation.
What: The business has raised £3 million in a seed round led by Sure Valley Ventures.
Advisors: LK Shields, led by Emmet Scully and Lester Sosa-Villatoro.
Why: The investment will be used to expand Jaid’s offering and markets as it targets the US, Europe and Asia.
Source: LK Shields Press Release
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.
The increase in the number of people working for foreign multinationals in Ireland compared to 2021. 32,426 new jobs were created by multinationals with Irish operations this year and the net job growth totals 24,019 bringing the overall figure to 301,475. @IDAIRELAND
Ireland exported c. €165bn worth of goods last year with chemicals and related products accounting for 62% of the total. Accounting for 32% of total goods exports, the US was Ireland’s largest trading partner. According to @CSOIreland @IrishTimesBiz
The proportion of internet users that conduct financial affairs through online banking in 2022, an increase of more than 10 percentage points year on year. @CSOIreland
The increase in Irish property prices in the year to the end of October. This is the first time the growth rate has been in single figures in 14 months. @CSOIreland
The EU has agreed upon a deal to introduce a 15% minimum corporate tax rate from 2024. It is likely Ireland will have to increase the rate from 12.5% to 15% for domestic and foreign MNCs with global earnings of over €750m per annum. @EUCommission
The increase in the total number of vehicles registered across Europe in November, compared to October. This is the fourth consecutive month of increases as supply chain issues continue to ease. @ACEA_auto @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