Renatus’ Weekly M&A Newsletter – 14/02/2021
February 14, 2021Renatus’ Weekly M&A Newsletter – 28/02/2021
February 28, 2021
Renatus Weekly M&A & Company Performance Newsletter 21/02/2021
Dear Reader,
Please find below this week’s newsletter covering the latest M&A, company performance, fundraisings and executive moves.
M&A ACTIVITY
Total Produce announces merger with Dole Foods
Deal Details: Dublin-headquartered Total Produce is to merge with US-based Dole Foods to create the world’s largest fresh fruit and vegetable supply business with combined c. $10 billion worth of sales (€8.2 billion) in 2020.
The new company will unify under one common ownership as a new U.S.-listed public company, operating under the Dole brand. The deal will see Total Produce de-list from the Euronext Dublin and the London Stock Exchange.
Total Produce shareholders will receive 82.5% of Dole plc shares while the Castle & Cooke Inc. shareholders, which own a 55% interest in Dole, will receive 17.5% of Dole Plc shares.
Dole plc, operating under the Dole brand, will be incorporated in Ireland, with its Global HQ in Dublin. Its headquarters for the Americas will be in Charlotte, North Carolina.
In connection with the Transaction, Dole plc intends to target raising $500 to $700 million by way of a public flotation in primary equity capital to strengthen and de-lever the combined balance sheet.
Advisers: Arthur Cox acted for Total Produce, with a team led by Connor Manning and Stephen Hegarty (Corporate and M&A) and included Maeve Moran, Ruth Donnellan, Kylie Dollard, Emma O’Keefe, Ultan Shannon, Kieran Finn, and Seamus Barnett.
Goldman Sachs International, is acting as exclusive financial adviser to the Company.
Davy is acting as Nomad/Euronext Growth Adviser and corporate broker to the Company.
Renatus Comment: Total Produce acquired a 45% stake in Dole Food Company in 2018 for a reported cash consideration of $300m. At the time, Dole was valued at an Enterprise Value of c. $2bn or roughly 9x Dole’s reported adjusted EBITDA of $237m at the time.
This merger is bringing together two of the world’s leading fresh produce companies with complementary market positions in various product segments and geographies. The aim of the merger is to simplify the existing structure between the two companies by unifying the two companies under common ownership with the objective of enabling full operational integration, realisation of synergies and value creation for the enlarged business. The deal will also see Dole plc be the global leader in fresh produce with an estimated combined 2020 revenue of approximately $9.7 billion, adjusted EBITDA of approximately $379 million and total assets of approximately $4.5 billion.
Total Produce and Fyffes (now Japanese owned) would feature in any top 10 Irish business success stories list. The story straddles many case study topics, from an evolving family business to plc success story, to a superb M&A and partnership strategy that propelled growth. It is amazing to think that Carl McCann still chairs the company that can trace its original origins back to “Charles McCann’s Fruit & Vegetable Market” in the North East in the 1850s. Every generation of the family that have held the stewardship of the business have delivered extraordinary achievements, with the present generation’s being combining Total Produce with Dole and its pending listing in the US, seeing it become the largest fresh produce company in the world.
Source: Total Produce
INDOS Financial to be acquired by JTC plc
Deal Details: FTSE 250 listed JTC, a global provider of fund, corporate and private client services, has announced the acquisition of INDOS Financial for a consideration of c. £12.5m (€14.4m).
Founded in 2012, INDOS is an industry-leading specialist in the provision of depositary, ESG and AML oversight services for alternative investment funds.
All of INDOS’s 52 directors and staff in its London, Fareham, and Enniscorthy offices will join the Institutional Client Services Division of JTC and will become shared owners in the business.
Advisers: INDOS Financial received Corporate Finance advise from Key Capital, led by Jonathan Dalton. Tughans acted on legals for INDOS Financial, led by John McGuckian and Aimee Craig.
Renatus Comment: This deal represents an important strategic acquisition, adding complementary capabilities and technical expertise to JTC’s increasingly sophisticated fund services offering.
This is the latest in a series of successful bolt-on acquisitions for the JTC Group, with similar transactions having been completed in 2018 (Van Doorn CFS, corporate services, Netherlands), 2019 (Exequtive Partners SA, fund and corporate services, Luxembourg) and 2020 (NES Financial, fund services and technology, USA).
Source: INDOS, JTC
Greencoat Renewables acquires Finnish wind farm
Deal Details: Greencoat Renewables, the Dublin-headquartered renewable infrastructure company, is acquiring a windfarm in Finland for a reported c. €60 million.
The 43.2MW Kokkoneva windfarm is currently under construction in Siikalatva, Finland, and commercial operations are expected to commence in Q2 2022.
The transaction will only be completed once the development is fully operational.
Advisers: Davy & RBC Capital Markets acted as joint brokers.
Renatus Comment: The deal marks the company’s first transaction in the Nordic market, in line with Greencoat Renewables’ European expansion strategy and follows the acquisition of a portfolio of three French wind farms in summer 2020.
Source: Greencoat
Belgian group buys Cork care home
Deal Details: AEDIFICA, a Brussels-listed healthcare real estate investment company has acquired the Bridhaven care home in Cork for a reported €25m consideration.
Bridhaven is a 184-bed resident care home operated by Virtue which is a private operator that is part of the Emera group. Virtue currently operates 650 beds across Dublin and the north-east.
Aedifica has developed a portfolio of more than 490-sites in Belgium, Germany and the Netherlands, the UK, Finland, Sweden and Ireland. This is the Group’s first investment into Ireland.
Advisers: None Mentioned
Renatus Comment: The Irish care market has seen a lot of deal activity in recent years, driven by a number of factors, including:
- High fragmentation: The top 10 operators are estimated to hold just 25% of the market
- Increasingly life expectancy: Ireland has the 7th highest life expectancy in the EU at 82
- Ageing population: The CSO is projected that the population of those over 80 will triple to nearly 550,000
- Increasing privatisation: Current estimates suggest that private operators have been increasing market share to an estimated 82% currently while public care homes run by the HSE account for 18% of the market.
Source: AEDIFICA Press Release
DEALS IN THE MAKING
Kerry Group announces intention to acquire Biosearch Life
It is speculated that Kerry Group is seeking to acquire Biosearch Life, a Spanish company that sells probiotic products made from human breast milk, for a total consideration of c. €127 million.
Based in Granada, Biosearch Life operates in the pharmaceutical, nutraceutical and functional food sectors and has over 150 employees.
Source: FoodBev, RTE
DEAL UPDATES
Grafton Group acquisition of Proline approved by CCPC
Grafton Group’s proposed acquisition of Proline Architectural Hardware has been approved by the CCPC. No financial consideration was disclosed. Grafton Group is the owner of Ireland’s largest builders’ merchants: Chadwicks and Woodies DIY
Advisers: JPA Brenson Lawlor provided Proline’s shareholders with corporate finance and tax advice, and were assisted by Proline’s auditors Hayden Brown Chartered Accountants. Lavelle Solicitors provided the shareholders with legal advice.
Source: JPA Brenson Lawlor
MJ Hudson’s acquisition of Bridge Group approved by Central Bank of Ireland
M J Hudson’s acquisition of Dublin-based Bridge Group’s has closed following receiving approval from the Central Bank of Ireland. The deal was announced back in October 2020.
Bridge Group was founded in 2005 and provides specialist support services to the funds sector.
Source: MJ Hudson Press Release
COMPANY PERFORMANCE
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
Kiernan Structural Steel limited, trading as Kiernan Steel, is a Longford-based steel manufacturer working with customers in the pharmaceutical, data centre, food service industries among others.
FY19 was a strong year for the business which saw Revenue and EBITDA grow by 8% and 139% to €36.3m and €3.6m, respectively. EBITDA outperformance can be traced to a seven percentage point increase in gross margins to c. 18% in FY19.
€3.6m of EBITDA converted to a net cash increase of c. €2.9m. Large cash outflows during the period were €930k in capital expenditure and c. €1.0m in loan repayments. These were partially offset by a c. €714k cash release from working capital and €577k of new loans drawn.
Kiernan Steel is a family business, owned by husband and wife team Frank and Dolores Kiernan who founded the business in 1989.
Based in Derry, Bulrush Horticulture is a producer of substrates for the retail, wholesale and professional growers market.
For the period ending September 2019, revenue grew by c. 8% to c. £15.9m while EBITDA grew by c. 18% to £3.0m.
£3.0m of EBITDA converted to a net cash increase of c. .£56k for the period. During the period there were large cash outflows relating to Dividends (c. £1.1m), loan to the parent company (£1.0m) and capital expenditure (£537k).
The business employs 77 staff at an annual cost of c. £2.8m. Bulrush is a wholly-owned subsidiary of the Danish substrate producer Pindstrup Mosebrug A/S.
RECENT FUNDRAISINGS
Who: Global software development and consultancy firm NearForm, which developed the technology used in the HSE’s Covid contact tracing app, secures strategic investment from Columbia Capital.
What: US firm Columbia Capital has invested an undisclosed sum in the Waterford company NearForm. Columbia Capital usually backs enterprise IT and mobility companies and typically invests a minimum of $15 million in a company.
Advisers: Laura Lynch of Laura Lynch & Associates acted as tax advisor to Nearform. Duff & Phelps Financial Advisory and Tax teams acted for Columbia Capital.
Why: NearForm will use the additional capital to scale operations and accelerate recruitment in sales, marketing, engineering and design across North America and Europe.
Source: NearForm
Who: Irish company Mainstay Medical, which has developed a device to address chronic lower back pain, has secured funding.
What: Mainstay Medical has raised $108 million (€89m). The financing was co-led by new investors Ally Bridge Group and Sofinnova Partners, through its Crossover Fund, and also included a large, global medical device company. Key existing investors who participated in the financing include Sofinnova Partners (Capital Fund), KCK Group and Fountain Healthcare Partners.
Advisers: Arthur Cox, led by Ciarán Bolger, Sophie Frederix, Ailbhe Ní Bhriain, Gillian Farrell and included Grace Gannon, Declan MacQuillan, Olivia Mullooly and Alison Peate advised Ally Bridge Group on its equity investment in Mainstay Medical Holdings plc.
Why: Mainstay intends to use the funds to support the company’s commercial launch of ReActiv8® in the U.S. and for continued expansion.
Source: Mainstay Medical
Who: AccountsIQ, a financial software company has secured funding.
What: AccountsIQ has secured a €5.8 million investment from UK- and-Netherlands-based venture capital firm, Finch Capital.
Advisers: Philip Lee, led by Eoghan Doyle, acted for Finch Capital on the investment, while Venture Legal Services advised the company.
Why: The funding will be used to accelerate growth of its cloud accounting platform for multi-entity businesses.
Source: AccountsIQ
Who: Galway-based Atlantic Therapeutics, who developed a wearable neuromuscular electrical stimulation device, called Innovo, has secured funding.
What: The MedTech company, has secured €2 million in funding from the Western Development Commission (WDC). The funding is complemented by an undisclosed investment from returning investors Seroba Life Sciences, Earlybird, LSP, Andera Partners and Atlantic Bridge.
Why: The funding will support the company’s route to commercialising the treatment in the US and UK markets, which last year received approval in the US from the FDA for its device.
Source: Silicon Republic
EXECUTIVE AND BOARD APPOINTMENTS
We in Renatus believe that more important than the deals are the people and we have teamed up with leaders in this field Korn Ferry to provide you with details of key recent executive and board level appointments.
THOUGHT FOR THE WEEK
What is not in doubt is that every economy is going to have a big bill from this pandemic to clear. What is emerging both sides of the Irish Sea feels to us that the UK are rushing to balance the books and Ireland appear to be taking the approach of, let’s keep the oxygen flowing today and we can pay for it tomorrow.
Rishi Sunak’s quote from Friday suggests that tax increases are on the way in UK:
“It’s right that once our economy begins to recover, we should look to return the public finances to a more sustainable footing and I’ll always be honest with the British people about how we will do this.”
It’s one to keep an eye on for many of us in business supplying the UK that they may front-load the cost of the pandemic more than Paschal Donohoe and co will here.
@RenatusCapital Tweets
47% & 105%
The respective year-on-year increases in terms of transactions and value of private equity activity in Ireland during 2020, with 56 PE transactions completed and the overall value rising to €5.2bn for the year. According to @WilliamFryLaw
14%
The year-on-year increase in Irish M&A deals in 2020, with a total value of €9.1bn, up from €8bn in 2019. According to @WilliamFryLaw
5%
The year-on-year rise in the value of exported goods from Ireland in 2020 with a value of €160,814m, an increase of €8,280m from 2019 exports. According to @CSOIreland
0.2%
The year-on-year decline in consumer prices in the year to January 2021. According to the latest Consumer Price Index from @CSOIreland
24%
The year-on-year decline in job postings on Indeed Ireland as of February 2021, when compared with the same period in 2020. According to @indeed @RTEbusiness
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ABOUT RENATUS
Renatus was 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:
- Succession planning
- Management buyouts
- Management buy-ins
- Growth financing – both organic and acquisition growth financing
- Full and partial share sale.
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