Renatus Weekly M&A & Company Performance Private Equity Newsletter 24/04/2022

Deal Details: Partners Group, a global private markets firm, is to acquire a majority stake in Version 1. Deal details have not been disclosed but it is reported that the deal values Version 1 at over €800m, 18 times forecast EBITDA for FY22.

Version 1, registered as Version 1 Holdings Limited, is a leading digital and cloud transformation partner to public and private sector customers across the UK and Ireland. Prior to this deal, the business was owned by Volpi Capital and by management. The business is led by CEO, Tom O’Connor, who will remain with the business post-deal. The business had reported FY20 revenues of €141m, which converted to an EBITDA of €21.4m.

Partners Group is a global private markets group. The business has invested over $170bn since 2016, with $127bn AUM as of December 2021. The business had FY21 revenue of €2.4bn, which converted to an EBITDA of €1.5bn.

Advisers:
Version 1:
Legal: A Maples team, led by Patrick Quinlan and supported by Colm Rafferty, Jordan O’Brien, Will Darmody, Conor Moran, and Shane Divilly on corporate, Mary Dunne and Richard Cepanauskas on competition, Lynn Cramer, Will Fogarty and John Crowley on tax, Claire Morrissey and Chanelle Huntly on IT/IP/data, Karen Killalea and Ciara Ni Longaigh on employment and benefits and Bernadette Lydon on property.
Deal Advisory: A Blackthorn Capital team, led by Ann-Marie Reddy.

Partners Group: None mentioned.

Renatus Comment: While Version 1 was on a strong, private equity-backed growth path led by Justin Keatinge prior to the Volpi investment, Volpi has played a key part in the growth journey of Version 1. The business has tripled in size over the last five years following Volpi Capital’s backing, which invested c. €90m at the time valuing the business at a reported c. €192m. The deal represents a successful exit for Volpi, whilst also allowing existing management to remain with the company and capitalise on the growing trend of digitalisation globally. Version 1’s initial growth and the partnership between Volpi and Version 1 have laid the foundations for the company to achieve its full potential.

Source: Version 1 Press Release

Deal Details: Abbey Tours, the country’s largest inbound tour company, is being bought out by its management team, led by CFO Darren Byrne. The deal is being backed by DunPort Capital.

Abbey Tours Limited operates as a tour operator in Ireland. It specialises in group travel services such as bus tours of Ireland and general city breaks. The company was founded in 1978 and is based in Dublin, Ireland. It is owned by Jane Magnier, Marina Finn, and Patricia McColgan.

DunPort Capital is a provider of non-bank corporate and SME debt capital in the Irish market, with an expanding presence in the UK. The business was founded in 2017 by Pat Walsh and Ross Morrow.

Advisers:
MBO Team:
Corporate Finance: Grant Thornton led by Gareth Cosgrove and Bruce Waldron
Tax: Grant Thornton led by Emer Dowling
Legal: Byrne Wallace with a team made up of Feargal Brennan, Zelda Deasy and Paraic O’Kennedy

Renatus Comment: This deal is an excellent example of how an MBO can allow a company to alter its existing shareholder structure to facilitate growth, with the existing shareholders exiting the business and eight members of the current management partaking in the buyout remaining to drive the business’ post-Covid recovery.

In the three years prior to Covid, the business reported an average turnover of over €92m and an average EBITDA of c. €8m. The business’ revenues slumped to €2.5m in 2020, owing to the total shutdown of the tourism sector. DunPort has emphasised that Abbey Tours was a great company before Covid, and will be a great company after, with the MBO positioning the company for a post-Covid bounce.

Source: DunPort Capital Press Release

Deal Details: Groupe Bruxelles Lambert (GBL) has announced the acquisition of a majority stake in Affidea Group from B-FLEXION, a global private investments firm. The deal consideration was not disclosed.

Affidea Group, founded in 1991 is a leading provider of medical diagnostic services in Europe. The business operates 315 diagnostic, outpatient, and cancer treatment centers in 15 countries across Europe. While the business is headquartered in the Netherlands it has significant presence in Ireland led by Barry Downes, CEO of Affidea Ireland. Affidea Ireland reported revenue of c. €26.4m in FY20 and employed c. 217 staff.

Groupe Bruxelles Lambert is a publicly traded, Belgian holding company invested in various sectors in which it can play an active role as a professional shareholder over the long term. The group is led by CEO Ian Gallienne and its portfolio includes names such as Adidas, Canyon and Pernod Ricard.

Advisers: None mentioned.

Renatus Comment: This deal marks the end of a very fruitful partnership between Affidea and previous stakeholder, B-FLEXION. Under B-FLEXION’s ownership, Affidea grew from c. 120 centres to over 320 and now provides services to over 10m patients a year. This investment also marks GBL’s first private investment into the healthcare sector.

Source: Affidea Press Release

Deal Details: Metso Outotek, a Finish-headquartered leader in technology for the minerals processing and metals refining industries, has acquired Tesab Engineering, a Tyrone-based manufacturer of equipment for mining and quarrying. The deal consideration was not disclosed.

Tesab Engineering was originally founded in Sweden before moving its headquarters to Northern Ireland. The business offers Heavy Duty Crushers, a range of screeners, and trackstack bulk handling systems. Tesab reported revenue of c. £25m in FY21 and employed around 65 employees.

Metso Outotek, which was established in 2020 after the merger of Outotec and Metso Minerals, provides a range of services and machinery to the metal and mining industries. The business is publicly traded on the Finnish stock exchange and employs over 15,000 employees throughout 90 countries. The business recorded FY21 revenue of c. €1.28bn.

Advisers:
Tesab:
Legal: Tughans provided legal advisory led by John-George Willis, Aimee Craig, Ben Sims, Rachel Richardson, and James Mulligan.
Corporate Finance: BDO Belfast led by Shane Hall
Tax: Paul McCourt provided tax advisory.

Metso Outotek:
Legal: A&L Goodbody (Belfast) led by Mark Thompson.

Renatus Comment: This deal adds to Metso’s substantial business interests in County Tyrone following its acquisition of McCloskey International (based in Canada and Northern Ireland) in October 2019.

Tyrone appears to be a silicon valley for businesses involved in the manufacture of engineering and technology-led equipment solutions for the global mining and quarrying industry. The likes of CDE Global, Edge Innovate, Terex Finlay, Smiley Monroe, and Powerscreen all come to mind.

According to Quarry Products Association Northern Ireland (QPANI), there are c. 160 quarries in Northern Ireland, many of which are located in Tyrone. This booming quarry industry has led to the development of equipment manufacturing expertise to serve these quarries with over 90 manufacturing and engineering companies related to mining and quarrying equipment springing up in Tyrone. While the majority of the equipment produced in Tyrone is now for export, the ecosystem was built on the foundation of serving a booming local industry.

Source: Metso Outotek Press Release

Deal Details: Kestrel Foods, based in Portadown, has acquired Just Live a Little, the granola brand. Deal details have not been disclosed.

Kestrel Foods Limited operates a portfolio of food brands, with a focus on plant-based snacks such as dried fruit, nuts, trail mixes, and granolas. The business is owned by Managing Director, Michael Hall. The business reported FY21 turnover of €15.8m, which converted to an EBITDA of €1m is based in Co. Armagh.

The Just Live a Little granola brand was founded in 2012 by David and Jill Crawford. The product is artisan granola offered in local markets. The business does not publish turnover or EBITDA information.

Advisers: None mentioned.

Renatus Comment: The acquisition sees Kestrel Foods expand its current brand portfolio, which already includes Forest Feast, ACTI-SNACK, and Private Label, whilst keeping in line with Kestrel’s focus on plant-based products. The deal will likely prove mutually beneficial, with Just Live a Little benefitting from Kestrel’s global reach, with Kestrel currently exporting to 26 countries and customers spread across retail, foodservice, and e-commerce.

Source: Insider Media

Deal Details: Fermanagh-based, McElwaine Technical Services (MTS) has acquired the non-destructive testing arm of London-based global testing, inspection, and certification provider, Element. The deal consideration was not disclosed.

MTS was founded in 1996 and provides integrity testing of processes, plant, and equipment within the liquid food industry. The business is family owned with Neville, Maisie and Jason McElwaine having equal shareholding. The business employs c. 21 staff in Fermanagh, Bristol, Cumbria, and Glasgow.

Element was formed in 2010 after the MBO of the testing division of the Netherlands-based Stork Engineering Group, backed by 3i Group plc. In 2016 Bridgepoint became Element’s principal investor and Temasek also hold a significant stake in the business. The business reported a turnover of c. £569m in 2020 and employed over 6,500 people.

Advisers: None mentioned.

Renatus Comment: This acquisition provides a good example of some of the opportunities and difficulties presented by Brexit. MTS, with its headquarters in Fermanagh, is in the unique position of having direct access to both the UK and EU markets. At the same time, new legislation in the UK has created a UK-only conformity mark for these products and services which differs from the conformity mark required throughout the EU and is required for sale in the UK. With the opportunity to access two thriving markets, comes the extra complexity and cost of differing legislation and requirements between the two jurisdictions.

Source: The Irish News

Deal Details: Quip, a New York-based oral care subscription company, has acquired New York and Dublin-based telehealth dentist, Toothpic. The deal consideration was not disclosed.

Quip was founded in 2015 by Simon Enever and Bill May and provides oral care products on a subscription basis through a digital platform. The business reportedly recorded revenue of c. $27m in its latest financials and employs c. 200 staff.

Toothpic, with locations in both New York and Dublin, provides digital dental services connecting dentists and patients. The business is mainly focused on the US market and has partnered with companies such as Blue Cross Blue Shield of Massachusetts and Stanford University dental plan. As of December 2020, the business employed c. 22 staff. The business is led by co-founders, Mark Moore and Shane Owens.

Advisers: None mentioned

Renatus Comment: While the deal consideration was not disclosed, this is likely a great move for Irish-born founders and CEO/CTO of Toothpic, Mark Moore and Shane Owens. While not mentioned explicitly, reports suggest that the Toothpic team will join Quip following the acquisition. Quip is rapidly becoming a leader in dental technology with this acquisition bringing them a step closer to a full suite of dental care products and services.

Source: Cision

Nordic Aviation Capital to exit bankruptcy

Deal Details: Limerick-based NAC has received approval from a Virginia (USA) court regarding a new restructuring plan which will see the business exit bankruptcy proceedings next month. The plan involves a $337m equity injection and a $200m revolving credit facility. In January of this year, NAC entered a separate restructuring support process which involved the business filing for Chapter 11 bankruptcy as a result of the business’s €5.6bn debt to equity shareholders and disruptions to trade during the pandemic.

Source: Independent

Meath-based Drummonds Limited is a feed, seed, and grain merchant predominantly serving farmers in the North East. The business operates from nine facilities throughout Ireland.

Drummonds reported FY21 revenue of c. €57.1m which converted to an EBITDA pf c. €2.1m, representing an increase of 1.1% and 25.3%, respectively. Significant post-EBITDA cash movements included the repayments of loans amounting to c. €2.0m and dividends paid of c. €1.8m. The business closed the year with a cash balance of c. €1.8m, a decrease of c. €1.6m from FY20.

The majority of Drummonds revenue came from the Republic of Ireland (c. 92%) with the remainder coming from the rest of Europe. The business employed an average of 53 staff throughout FY21 at a cost of c. €3.0m. The business is 50% owned by Liam Wolfe with the remainder held by Fane Valley Ireland.

Founded by John Condron in 1969, Condron Concrete is a manufacturer of concrete pipes, manholes, gulley traps, concrete roof tiles and accessories. The business operates from a facility in Tullamore, Offaly.

The business reported a turnover of c. €26m in FY21 which converted to an EBITDA of c. €3.9m. This represented a 17.5% and 42.4% increase, respectively. Significant post-EBITDA cash movements included the purchase of tangible fixed assets for c. €1.6m and proceeds from borrowings amounting to €1.9m. The business closed FY21 with a cash balance of c. €1.3m, an increase of c. €695.8k from FY20.

John James Condron is the holder of all voting shares in the business. The business employed an average of 99 staff throughout FY21 at a cost of c. €5.9m.