Renatus’ Weekly M&A Newsletter – 15/11/2020
November 15, 2020Renatus’ Weekly M&A Newsletter – 13/12/2020
December 13, 2020
M&A ACTIVITY
Longboat is acquired by Advarra
Deal Details: Longboat Clinical has been acquired by US and Columbia-based company Advarra. The financial details of the deal were not disclosed, although informed sources said it represented one of the biggest M&A deals in Ireland this year.
With offices in Limerick and Dublin, Longboat’s user-friendly, integrated platform helps to simplify trial conduct and participation, increase study compliance and, ultimately, accelerate clinical trials.
Advarra is the market leader in regulatory review solutions and clinical site technologies. It provides integrated solutions that safeguard patients, empower clinical sites, ensure compliance and optimize research performance.
The combination of Advarra’s existing offering with Longboat’s technology will create the industry’s first integrated compliance management platform linking regulator review solutions with clinical site technologies.
Advisers: Deloitte’s Munster-based Financial Advisory Partner Ronan Murray and Associate Director Derek Murphy provided M&A corporate finance advice to the shareholders of Longboat Clinical. Deloitte also provided tax support to the vendors.
Alan O’Driscoll, John Troute and Jonathan O’Beirne from Flynn O’Driscoll provided legal advice to Longboat shareholders.
Advarra received legal advice from Ropes & Grey (US) and an A&L Goodbody team led by Mark Ward and Phil Fogarty.
Renatus Comment: This deal marks another exit for serial entrepreneur Gerard Ryan who previously sold Dublin-listed Icon for a reported €50m. Longboat had raised €4m in funds previously with backers including Kieran Curran and former Pfizer Ireland CEO Dave Shanahan. Latest filings for Longboat are for the period ending December FY 2018 and show the business made a net loss of c. €1.25m for that period
The status quo in clinical trials for many years has been a reliance on a paper-based system of record keeping and patient data handling. COVID-19 has changed a lot of this. Trials that may have lasted years are being fast-tracked to be completed in months, creating timing pressure on the people collecting and analysing the data. Technology solutions, like Longboat’s, that were seen as being nice-to-have are now quickly becoming must-haves.
Source: Longboat Clinical Press Release, Irish Times
Uniphar acquires RRD International
Deal Details: Irish pharma supply group Uniphar has acquired US-based RRD International. Although the financial consideration was not disclosed, terms include an upfront payment plus a consideration linked to EBITDA performance targets.
RRD International is a product development company that provides integrated, expert-level strategic, regulatory and operational support to biopharmaceutical companies and investors.
Uniphar PLC is a trusted global partner to pharma and med-tech manufacturers across three divisions – Commercial & Clinical, Product Access and Supply Chain & Retail.
With a workforce of over 2,300 people, Uniphar is active across Ireland, the UK, Benelux, the Nordics and the US.
Advisers: Seamus Egan of the Uniphar Corporate development team, Blank Rome US, Dublin-based Capnua, PwC Chicago & PwC Dublin assisted Uniphar with the transaction.
RRD was represented by Clearsight Advisors, an investment banking firm, headquartered in McLean, VA.
Renatus Comment: This deal marks Uniphar’s second US acquisition after acquiring Diligent Health solutions for c.€23.1m in late September. Uniphar is a great case study of an Irish-founded business undergoing tremendous growth nationally and looking to expand operations to service a wider global market.
This acquisition is part of the group’s strategic objective to expand its US footprint. Acquiring RRD will give them unique access to new products and will provide them with crucial insights into a highly regulated US pharma market.
Source: The Irish Times, RRD
Keywords Studios to acquire Gnet Media
Deal Details: Dublin-headquartered video games specialist Keywords Studios has agreed to buy Gnet Media in a deal reportedly worth up to $32m(c.€27m). Keywords will pay an initial consideration of $14.4m in cash with $3.5m in shares payable one year post-completion. The remaining consideration of up to $14m will be contingent on performance targets being met.
LA-based Gnet Media provides marketing services to the video games and entertainment industries and has worked on franchises such as Call of Duty, Fallout, Gears of War and Destiny.
This is Keywords’ fourth acquisition since its £100m share placing in May and is part of the company’s bid to broaden its range of marketing services. This is part of an overall strategy to become the “go to” technical creative service platform for the video game industry.
Gnet brings the number of Keywords specialist marketing studios to seven.
Advisers: None Mentioned
Renatus Comment: Keywords Studios is one of the most frequently featured companies in our weekly newsletter due to its activity in the M&A market. Keywords is up there with CRH as being one of the best examples of an Irish company meticulously executing a programmatic M&A strategy to augment its organic growth. Not too long ago Keyword Studios completed a share placing which helped to give it the financial firepower to go out and complete this and other acquisitions.
A focused acquisition strategy can be a key tool in a company’s growth playbook. This is an area that we in Renatus have deep expertise in and can help in exploring. If you would like to have a chat on this, feel free to reach out by simply replying to this mail.
Source: Keywords Studios
DCN Dx has received growth capital from Martis Capital
Deal Details: DCN Dx has received equity investment from Martis Capital, a private equity firm focused on the healthcare industry. The financial consideration was not disclosed.
Based in California and co-founded by Brendan O’Farrell, DCN Dx is the world’s leading independent developer of lateral flow technology for point-of care diagnostics application. Over the past 15 years, DCN Dx has successfully developed more than 100 rapid diagnostic tests for its customers.
Based in San-Francisco, Martis Capital manages more than $1.2bn of equity capital and is currently investing out of its third fund.
Advisers: Pegasus Capital and TM Capital advised on the transaction
Renatus Comment: Given the challenges we face today, diagnostic testing companies have quickly become attractive investment targets for corporate and financial acquirers. A high-growth industry driven by immense global demand makes this an attractive investment for Martis.
It is great to see Pegasus, a well-respected Irish corporate finance boutique playing a part in an all-US deal under challenging times.
Source: DCN Press Release
DEAL UPDATES
Irish Infrastructure Fund’s acquisition of Magnet Networks gets approved
The proposed acquisition by Speed Fibre Intermediate Holdings Limited, an entity controlled by the Irish Infrastructure Fund, of Magnet Networks Limited has been cleared by the Competition and Consumer Protection Commission.
Speed Fibre Intermediate Holdings Limited is the purchasing company for the proposed transaction. The Irish Infrastructure Fund invests in infrastructure assets in the State.
Magnet Networks, owned by Ken Peterson, is a leading Telecommunications, Data Connectivity and Security Services provider, providing solutions to homes, businesses, and enterprise customers in Ireland, throughout Europe, the US and beyond.
Source: CCPC
Caldic’s acquisition of Brand-Nu laboratories and BNL sciences gets regulatory approval
The proposed acquisition by Caldic B.V. of sole control of Brand-Nu Laboratories, Inc. and BNL Sciences Ltd. has been cleared by the Competition and Consumer Protection Commission.
Netherlands-headquartered Caldic is a full-service innovative solution provider for the global Food, Health & Personal Care, and Industrial markets.
BNL Sciences, based in Naas, Ireland, is one of the leading distributors of high purity chemicals to the pharmaceutical industry in Ireland. American company Brand-Nu focuses on the distribution of high purity specialty chemicals, excipients, and biological raw materials.
Source: CCPC
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 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.
Quarry and Mining Equipment Limited (QME) undertakes contract mining projects in Ireland and abroad. QME also offers rental and ownership opportunities for new and used mining and tunnelling equipment.
In its latest fiscal year, QME saw revenue increase by 12.6% to c. €24.7m. EBITDA also increased by 5.5% to c. €4.5m during the period. Gross profit margins increased by roughly four percentage points to c. 71% in FY19. The relative underperformance in EBITDA growth versus revenue growth was the result of a c. €2m increase in overhead expenses to c. €14.4m during the period.
The company had a net cash decrease of c. €447k in FY19 leaving an ending cash balance of c.€1.9m. The most significant movements in cash was the c.€6.1m in capital expenditure virtually all of which related to plant & machinery, the c.€3.7m in new loans drawn down and the c.€980.6k spent on “Other Unlisted Investments”.
The company employed an average of 147 employees in FY19 at a total cost of c.€10.9m. Quarry and Mining Equipment Ltd is owned by Peter Mcparland( 66.7%) and Brenda Mcparland (33.3%).
BS&B Safety Systems Limited is the Irish operations of BS&B, a world leader in the design and manufacture of non-reclosing pressure relief devices that protect personnel and equipment from the dangers of overpressure and explosion. BS&B has operations in North America, South America, EMEA and in APAC.
In its latest fiscal year, BS&B safety saw revenue increase by 16.6% to c.€20.6m. BS&B generates its revenue in Ireland (c. 25%), Europe (c. 41%) and Rest of World (c. 34%). Despite a marginal decline in gross margins by one percentage point to 81%, EBITDA grew by c. 47% to €6.3m during the period as a result of overheads remaining largely flat at c. €10.7m.
The company had a net cash increase of c.€2.3m in FY19 leaving an ending cash balance of c.€4.4m. The largest drain on cash was the c.€407k invested mainly in fixtures, fittings & equipment and plant & machinery and the c.€1.7m worth of dividends paid out to shareholders during the period.
The company hired an extra 7 people in FY19 bringing the total headcount to 78 people at a total cost of c. €5.3m. BS&B Safety Systems Limited is ultimately owned by Panama-based Caffa Holdings S.A.
Niagara Films Ireland trading as Brown Bag Films was Founded in 1994 by Managing Director Cathal Gaffney and Creative Director Darragh O’Connell . It has since become a world-renowned creative driven animation studio headquartered in Dublin.
In its latest fiscal year, Niagara Films saw revenue decrease marginally by 1.2% to c. €50.1m. Roughly 80% of Niagara’s revenue is attributed to production with the remaining c. 20% coming from distribution. EBITDA declined by c. 18% during the period to c. €9.1m. The EBITDA decline looks to be the result of a c. €750k increase in overheads coupled with a roughly one percentage point decline in gross margins to c. 35%.
The company had a net cash decrease of c.€2.4m in FY19 leaving an ending cash balance of c. €12.1m. There was a huge draw on cash during the period due to working capital suck of c. €8.2m, mainly comprised of a c. €5m increase in trade and other receivables and a c. €2.2m decrease in creditors. Additionally, c. €3.6m was spent on acquiring content and €1.8m of dividends were paid out. Partially offsetting these outflows was the issuance of c. €3.66m worth of new shares.
The company hired an extra 64 people in FY19 bringing the total headcount to 398 at a total cost of c. €21.6m. Brown Bag Films was acquired by Canada-based 9 Story Media Group in 2015.
RECENT FUNDRAISINGS
Who: Dublin-based Agtech start-up Cainthus has raised funding. Founded by brothers David and Ross hunt in 2016, Cainthus has developed facial recognition for cows.
What: The company set out to raise more than $51m(c.€42m) but didn’t say how far the fundraising had proceeded. Latest filings show that Cainthus has 23 different shareholdings with the largest being brothers David and Ross Hunt owning a collective c. 38% of the shares. The next biggest shareholders are Cargill, one of the largest privately held corporations in the US, holding c. 29% and Kendry Corp with 19% of the shares.
Why: The intended use of funds was not disclosed.
Source: RTE
Who: Global online education provider Udemy has raised further funds. Founded in 2010, Udemy offers over 150,000 online courses across an array of subjects including Business, IT & Software, Marketing and many other areas.
What: The most recent fundraise amounted to $50m (€42m) bringing the total investment this year to $100m and total fundraising to date to $250m.
Why: The funds will be used to expand its footprint in Dublin. The company have announced 100 new jobs in Dublin as part of expansion.
Source: RTE
Who: Food group Greencore raises funds in new share placing.
What: £90m(c.€101m) was raised from the placing of over 80 million new shares.
David Kearney and John Flynn of Goodbody, along with HSBC and Shore Capital Stockbrokers acted as joint Global co-ordinators on the equity placing. Arthur cox acted as legal advisors.
Why: The placing was undertaken to protect and support growth in the business.
Source: RTE
Who: The Naked Collective, an Irish start-up that makes non-alcoholic drinks. Based in Kildare, the company is led by Niall Phelan who also co-founded Rye River Brewing company.
What: The business has completed a reported €6m funding round with the expectation of raising millions more in quarter 1 of 2021. Named backers include Luke Vice and James VanderLinden the duo who set up Aware.
Richard Duffy of BDO Corporate Finance advised the Naked Collective on the fundraise.
Why: The funds raised are being used to accelerate the company’s launch into the North American market.
Source: Sunday Times
Who: Kinzen, a fake news detection platform built by Mark Little and Aine Kerr.
What: Kinzen has closed a reported $2.2m funding round led by FST Growth, a Danish start-up accelerator. Business Venture Partners, Hostelworld co-founder Ray Nolan, Enterprise Ireland and Singapore-based Derianto Kusuma also participated in the round.
Why: Funds raised will likely be used to continue developing the technology platform to tackle misinformation, an increasing problem for big tech companies such as Google, Facebook and Twitter.
Source: Irish Times
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
The possibility that CGT could double next March in sterling land has caused quite a stir.
We had spoken to some such vendors about acquiring part or all of their businesses and they were in no rush but now they are.
It would be difficult to go from a standing start and acquire a business now but anyone who has had a chat before and it has gone quiet should attempt to re-ignite the chat.
Below is an article outlining possible changes.
Article link: UK may double capital gains tax burden
LAUNCH PROGRAMME
We in Renatus wanted to make our readers aware of a really super initiative to support Irish entrepreneurs in the Cork locality.
BKK Advisory, Ronan Daly Jermyn, Republic of Work MGFD Digital Marketing Consultancy have joined forces as a professional group to offer a mentorship and support programme to help grow the start-up community locally in Cork.
They are coming together under the Launch | Your Business | With Partners programme to provide a professional partnership with 10 growing businesses to access a network of industry-leading entrepreneurs and professionals who will share valuable expertise and experience of growing successful ventures over a 6-week Programme. At the end of the programme, participants will have the opportunity to use learnings gained to participate in a competition where each will be afforded the opportunity to “pitch” their business to a panel for a Launch scale-up support prize to the value of €25,000.
If you wish to learn more you can visit the website here or you can apply to the Launch Partnership Programme here.
@RenatusCapital Tweets
8.1% & 4.2%
The year-on-year increase in the Irish retail volume and value indices, respectively, for October 2020 with the most notable changes in Bars (-75.2%) and Other Retail Sales (+41.2%), according to @CSOIreland
3.7%
The year-on-year increase in the Irish average weekly earnings for Q3 2020 amounting to €797.83. The increase is a likely result of Covid-related wage subsidy schemes, according to @CSOIreland
65.5
The KBC Bank Irish consumer sentiment index for November 2020, a 12.9 point jump from October. @rte
29.8%
The year-on-year decrease in the Irish road freight tonnage for Q2 2020 amounting to 30.0 million tonnes transported by road, according to @CSOIreland
ABOUT RENATUS
Renatus was established in 2014 by Mark Flood and Brendan Traynor 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 of €5m and above. Our typical solutions include:
- Succession Planning
- Management Buyouts / Buy-Ins
- Funding for organic growth
- Acquisition Funding; and
- Share Sales
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