Renatus Weekly M&A & Company Performance Private Equity Newsletter 30/04/2023

Deal Details: MTM Engineering has acquired ATSS Ventures for an undisclosed sum.

MTM Engineering is a specialist electrical and mechanical contracting business that was founded in 1997 by Martin & Patricia Mee. The second-generation family business is now led by Brendan Mee and received private equity investment from Waterland last year. In FY Dec 21, the business reported turnover of c. €40.2m which converted to an EBITDA of c. €4.2m.

ATSS Ventures Limited is a Kilkenny-based specialist provider of structured cabling and fibre optic cabling services. The business was established in 2011 and is owned by Philip Doheny. It does not report turnover or EBITDA information.

Advisers:
MTM Engineering:
Financial advisory: Deloitte led by Conor Cullen, Marc Rogers, Mark Riley, Chris Cummins, David Shanahan and Karen Clarke.

ATSS Ventures:
None mentioned.

Renatus Comment: ATSS Ventures will now form part of CET Connect, which MTM Engineering acquired last month for an undisclosed sum. We have often marvelled in this newsletter at how Irish companies like Mercury, KN Networks, Winthrop, Dornan, Kirby and H&MV remain at the forefront of the specialist engineering world. The country’s high number of data centres (over 70 currently operational) has been well-documented for their energy consumption and the pressure they put on the grid. The operators of these data centres include some of the world’s largest technology companies such as Google, Amazon, Microsoft, and Facebook. These firms prioritise reliability and maintaining the necessary fibre and connectivity infrastructure for their assets is critical. Irish firms like MTM/ CET Connect have gained strong reputations and should continue to enjoy future growth.

Source: MTM Engineering Press Release

Deal Details: Cornmarket has acquired KD Retirement Services for an undisclosed sum.

Cornmarket is a public-sector financial services business. Cornmarket is a member of the Irish Life Group, which itself is part of the Great-West Lifeco Group. In FY Dec 21, the business reported turnover of c. €57.9m.

KD Retirement Services which trades as Capital Advisory Services (CAS), is a Dublin-based retirement planning business and financial adviser that focuses on services for members of the Irish Prison Service. In FY Dec 22, the business reported turnover of c. €251k.

Advisers: None mentioned.

Renatus Comment: Earlier this month, Cornmarket’s parent Irish Life spun out a new wealth management division called Unio, comprising of its Invesco, Acumen & Trust and APT businesses. The unit has c. €14bn AUM and has a client profile of more than €1 million of investible assets. Cornmarket plays in a different sector niche, offering a comprehensive suite of financial well-being products to public sector employees. Having also previously acquired Scottish brokerage firm EIS Financial Services in 2020, it is clear Irish Life is using Cornmarket as a platform to carry out a buy-and-build strategy, similar to those seen across the wealth management industry in recent years.

Source: Irish Times

Deal Details: Retail In Motion has been acquired by Aurelius Group, as part of a larger deal to acquire its parent, LSG Group. The deal is subject to CCPC approval and deal consideration was not disclosed.

Retail In Motion Limited is a Dublin-based company that specialises in in-flight and on-board retail products, services and technology for airlines and train operators. In 2013, it was acquired by the LSG Group, which itself is owned by Lufthansa AG. LSG is one the world’s largest transport catering & hospitality service providers. The business was heavily impacted by travel restrictions resulting from Covid-19 but in FY Dec 19 it reported turnover of c. €98.2m that converted to EBITDA of c. €8.6m.

Aurelius Group is a German-based investment and asset management company. It was established in 2005 by Dirk Markus and Gert Purkert. In 2021 it raised a €540m fund to invest in UK and European mid-market companies.

Advisers: None mentioned.

Renatus Comment: According to Counter Intelligence Retail, the biggest category for in-flight sales has remained consistent through several decades of air travel, with first place held by female fragrances and second place by alcohol. Consumers now spend less money in-flight than they have in years gone by with over 60% of purchases now occurring in the airport pre-flight. Data analytics and technology solutions, such as those offered by Retail In Motion, are in demand from airlines to compete with the airports, many of which can offer the consumer a shopping experience similar to that of a large mall or department store.

Source: Aurelius Group Press Release

Deal Details: In the Company of Huskies has been acquired by Forsman & Bodenfors. Deal consideration was not disclosed.

In the Company of Huskies is a Dublin-based communications and digital marketing agency that was formerly known as Cybercom before a re-brand in 2013. It will be re-branded as F&B Huskies following this deal. It is owned by Jonathan Forrest and Sheana Keane. It does not report turnover or EBITDA information.

Forsman & Bodenfors is a Swedish creative marketing agency. It was founded in 1986 and is owned by Stagwell Inc., a NASDAQ-listed marketing group. In FY Dec 22, Stagwell reported turnover of c. $2.7bn which converted to EBITDA of c. $1.0bn.

Advisers:
In the Company of Huskies:
Tax: PKF O’Connor, Leddy & Holmes led by Eoin Kenny and Catherine McGovern
Transaction Services Support: PKF O’Connor, Leddy & Holmes by Jack Swinburne and Ben Pentony.
Legal: Beauchamps led by Shaun O’Shea.

Forsman & Bodenfors:
Financial Advisor & Tax DD: PWC (New York office).

Renatus Comment: In the Company of Huskies previously acquired Brando Advertising Agency in 2016. We have seen several deals in the digital marketing space so far in 2023, including Opus Group’s acquisition of Verve and LWA Group’s acquisition of Bloom. This is Forsman & Bodenfors’ first entry into the Irish market.

When it comes to digital marketing, it makes sense for international players to use M&A to achieve growth. The success of companies in this industry is often tied to a limited number of exceptional individuals. M&A deals allow larger firms to access talent and tap into client bases in new geographies in a more efficient manner than organic growth could allow. As part of a larger group, smaller firms can also streamline operations and cut admin costs, allowing for improved performance.

Source: Business Post

Deal Details: Medray Imaging Systems has acquired Hulbert Imaging. Deal consideration was not disclosed.

Medray Imaging Systems is a provider of healthcare equipment, accessories and consumables. It was established in 1979 and is now owned by Irish private equity firm Erisbeg, along with Managing Director Siobhan Crowley. In FY Dec 21 it reported turnover of c. €24.3m which converted to EBITDA of €3.3m.

Hulbert Imaging is a UK-based provider of dental and healthcare equipment. It was owned by Anthony Hulbert, William Hulbert, Alice Hulbert and Tom Lacy. It does not report turnover or EBITDA information.

Advisers: None mentioned.

Renatus Comment: This deal marks Medray Imaging Systems’ third acquisition since receiving private equity backing in 2019. The business is underpinned by two key customers in the HSE and NHS. Ageing population demographics combined with the increasing prevalence of chronic disease and the rising need for early diagnoses, will continue to drive demand for radiography and imaging equipment across both of these national health services. The company appears to be implementing a UK-focused growth strategy, having acquired Carestream Health’s UK service business in 2020. Now, by acquiring Hulbert Imaging, it is also growing its dental and maxillofacial imaging product offering.

Source: Business Plus

Deal Details: John Morrison Motors has been acquired by Bolands Waterford City. Deal consideration was not disclosed and is subject to CCPC approval.

John Morrison Motors is a motor retailer, dealing BMW/MINI vehicles. It is based in Cahir, Co. Tipperary. It is owned by Gary Morrison and John Murphy. It does not report turnover or EBITDA information.

Bolands Waterford City is a BMW/MINI dealership in Co. Waterford. It is owned by James Boland Jnr. In FY Dec 21 it reported turnover of c. €60.5m which converted to EBITDA of c. €4.4m.

Advisers: None mentioned.

Renatus Comment: The Bolands’ car dealership is an interesting story, tracing its origins back to 1922 when Andrew Boland purchased a Model T Ford Truck to do deliveries for his general Merchant business in New Ross. In the decades since, the business has sold Ford, Citroen and Hyundai vehicles with the Waterford location now focusing on BMW and MINI.

The BMW 5 Series ranked as the most popular luxury car, over €40k, in Ireland in both 2021 and 2022, according to Motorstats. New car sales in Q1 totalled 58,116, a 16.5% rise on last year, although this is still 9.4% down on the first quarter of 2019. Ireland’s economy continues to perform robustly despite global macroeconomic challenges. While unemployment remains low and many white-collar workers continue to earn healthy salaries, it is likely that luxury vehicle sales will continue to trend back towards pre-pandemic levels.

Source: CCPC

AIB carries out €215 million share buy-back from the Irish government

Deal Details: AIB has agreed with the Irish government to buy back €215.3 million worth of its shares. The deal continues the government’s plan to reduce its stake in the bank through both small sales and large stock placements. The government’s stake in the bank will now stand at 53.4%. The transaction will involve AIB acquiring 54.7 million shares, just over 2% of the business.

Source: Irish Times

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J. Grennan & Sons (“Grennan Mills Limited”) is an Offaly-based agri-business focused on feed and fertiliser. It is owned by Niall, Sheelagh and James Grennan.

In its financial year to December 2021, the business generated a turnover of c. €85.3m, an increase of c. 14.5% year-on-year. This converted to an EBITDA of c. €3.8m, an increase of 31.1% year-on-year. The increase in EBITDA was largely due to gross margin improvement, which accounted for c. €0.5m of the increase.

Significant post-EBITDA cash movements included payments to acquire tangible assets of c. €3.1m, bank borrowings of c. €6.5m, and loan repayments of c. €3.6m. The business finished the year with a cash balance of c. €5.0m, a €2.7m year-on-year increase.

The business employed an average of 105 people in FY21 at a total cost of c. €5.4m.