M&A daily wrap: Middleby, Taylor, United Technologies, Campbell Soup, IHS Markit, Ipreo, Blackstone
Middleby Corp. (Nasdaq: MIDD), the world's largest commercial kitchen equipment manufacturer, has agreed to buy Taylor Co. a seller of ice cream dispensing equipment, frozen drink machines and automated double-sided grills, from United Technologies for $1 billion. Taylor had been part of United's climate, controls and security division, and the seller wants to focus on its core business lines. "We believe Taylor is well positioned for growth as customers continue to invest in and expand their beverage offerings," says Middleby CEO Selim Bassoul. Taylor began as a small ice cream shop in Buffalo, New York. The owner made a freezer to store ice cream and then later sold commercial freezers to other businesses. Today, Taylor sells ice cream dispensers, milkshake and slush makers, and commercial food grills. Taylor generated around $315 million in revenue in 2017. Wachtell Lipton Rosen & Katz is representing United. Middleby has been busy expanding its product reach through acquisitions. The company bought Viking Range in 2013. It recently purchased Josper SA, a maker of charcoal grill and other types of cooking equipment; acquired A.C. Beverage Inc. subsidiary JoeTap, a provider of nitro and cold brew coffee dispensing equipment for the commercial foodservice industry; and recently announced plans to buy steam cooking equipment maker Firex Srl; acquired freezing equipment manufacturer Scanico; and solutions manufacturer Hinds-Bock Corp. With Memorial Day weekend coming up and summer around the corner, vacation-related and outdoor equipment deals are thriving. For example, retailer Camping World Holdings Inc. (NYSE: CWH) agreed to acquire Cullum & Maxey Camping Center.
“Everything is on the table; there are no sacred cows,” said Keith McLoughlin, interim CEO and board member of Campbell Soup Co. (NYSE: CPB) in a May 18 conference call, following the release of third quarter results he described as “unsatisfactory and disappointing” and the announcement that CEO Denise Morrison was retiring, effective immediately. Campbell is undertaking “a thorough and critical review of all aspects of our strategic and operating plans, including the composition of our entire portfolio,” McLoughlin said. During an all-employee meeting later in the day, McLoughlin said that, as a public company, Campbell was for sale every day, but that his strategy was not to sell the company, according to the Wall Street Journal, quoting an unnamed source who reportedly was at the meeting. Campbell, which won Mergers & Acquisitions’ M&A Mid-Market Award for 2017 Strategic Buyer of the Year, has been leveraging acquisitions to ensure the company known for comfort food for nearly 150 years remains relevant to millennials and future generations. Campbell recently closed two significant deals: the $4.8 billion acquisition of pretzel marker Snyder’s-Lance; and the $700 million purchase of organic soup maker Pacific Foods. But, like many other food producers, it faces significant challenges, including higher commodity costs and pressure to lower prices coming from Amazon.com Inc. (Nasdaq: AMZN), Walmart Inc. (NYSE: WMT) and other retailers. During the call, McLoughlin gave shout-outs to the acquisitions: “The recent addition of the Snyder's-Lance portfolio of brands and Pacific Foods, both of which I strongly supported, will enhance our growth potential as we expand into the faster-growing snacking categories and enhance our health and well-being offerings of soup and broth.” He also identified nine brands as “tremendous assets:” Pepperidge Farms, Campbell, Swanson, Arnott's, V8, Prego, Pace, Plum and Kelsen. McLoughlin promised to provide an update on the strategic review during the fourth quarter call at the end of August.
Partners Group has agreed to buy a majority stake in digital engineering products firm GlobalLogic from Apax Partners. The deal values the target at over $2 billion, and Partners joins existing investor Canada Pension Plan Investment Board. GlobalLogic helps companies create digital products to enhance customer engagement. Apax sold a 48 percent stake in GlobalLogic to CPPIB in 2017. Ropes & Gray is representing Partners.
IHS Markit (Nasdaq: INFO) has agreed to acquire financial services data provider Ipreo for $1.85 billion from the Blackstone Group LP (NYSE: BX) and Goldman Sachs' merchant banking division. Barclays, HSBC and Davis Polk & Wardwell are advising IHS. The target serves banks, individual and institutional investors, asset management and wealth management firms with research and data. "Across multiple product lines, we will deliver a more comprehensive service that will allow clients to streamline their workflow and make quicker and better decisions," says IHS CEO Lance Uggla. Separately, IHS said it will seek buyers for its Markitserv derivatives processing business.
Fifth Third Bancorp. (Nasdaq: FITB) has agreed to merge with MB Financial for $4.7 billion. Chicago-based MB serves middle-market companies and has more than $20 billion in assets. "Our commercial expertise and strong credit culture complement the strengths of Fifth Third in large corporate lending, capital markets, wealth management and the payments business," says MB CEO Mitchell Feiger. Simpson Thacher is representing Fifth Third.
Marlin Equity Partners is acquiring Virgin Pulse and merging it with RedBrick Health to create the world's largest digital health and engagement company. Financial terms were not disclosed. Evercore Inc. (NYSE: EVR) and Willkie Farr are advising Virgin Pulse. Raymond James and Goodwin Procter are advising RedBrick. William Blair and Kirkland & Ellis are advising Marlin.
Logistics company Savage Cos. has merged grain exporter Bartlett and Co. Financial terms were not disclosed.
Oasmia Pharmaceutical AB (NASDAQ: OASM) is spinning off its veterinary oncology assets to AdvaVet Inc. Sichenzia Ross Ference Kesner LLP represented Oasmia.
Madison Capital Funding, a subsidiary of New York Life Insurance Co., has long been a stellar source of capital in the middle market. Since its founding in 2001, the Chicago lender has invested $29.2 billion of net funded commitments in 1,075 transactions with 287 different private equity sponsors. With $9.5 billion in assets under management, Madison invests alongside private equity sponsors and other investors to provide cash-flow based debt products to companies with a minimum $3.5 million in Ebitda. To gain insights on how lenders evaluate potential transactions in today's highly competitive market, we asked Madison's chief underwriting officer Jennifer Cotton to share her thoughts. Cotton oversees Madison's underwriting and portfolio management teams and serves as a member of the Investment Committee as well as the Senior Leadership team. Read the full story here: Abundance of capital drives highly competitive loan process, says Madison Capital's chief underwriter.
Covenant-lite loans are making a comeback, as competition in middle-market lending increases, says Ken Ken, CEO of Churchill Asset Management. Following on the heels of a record year of capital raising, debt financing provider Churchill recently closed a $300 million collateralized loan obligation fund, Churchill Middle Market CLO IV. Churchill is part of Nuveen, the asset management division of TIAA. Overall, Churchill manages more than $4.4 billion in committed capital. Read our Q&A: CLOs are huge draw for income-hungry investors, says Churchill CEO Ken Kencel.
For more on the lender front, Twin Brook Capital Partners grew significantly in 2017, including doubling deal value from the previous year, raising a second fund of $2.3 billion, and building the three-year-old firm into a major source of loans in the lower middle market, earning the firm Mergers & Acquisitions' M&A Mid-Market Award for 2017 Lender of the Year. The Chicago firm is the middle-market direct lending subsidiary of Angelo, Gordon & Co., a $28 billion alternative investment firm focused on credit and real estate investing. Twin Brook was founded in 2014 by seasoned middle-market lenders Trevor Clark and Christopher Williams, who had previously co-founded Madison Capital Funding. Twin Brook announced recently that Williams has stepped 8back from his role to attend to a health issue with an immediate family member. Read our Q&A: Lenders must be active partners, says Twin Brook's Trevor Clark.
Artificial intelligence, the Internet of Things, wearable biometrics and precision medicine are transforming dealmaking in the healthcare sector, says Essam Abadir, the CEO of Aspire Ventures, which recently teamed with the Penn Medicine Lancaster General Health network of hospitals to launch a $300 million fund to invest in personalized medical devices and practices. Read our Q&A with Abadir.
For recent deal announcements, including Brynwood Partners' acquisition of Carolina Beverage, see The weekly wrap: Brynwood Partners; Kohlberg, Zoetis.
To see which private equity firms are raising funds, including Argonne Capital, CI Capital, Iconiq Strategic Partners, see PE fundraising scorecard.
Dennis Zhang was hired by Raymond James (NYSE: RJF) as a managing director. Most recently with Stifel Financial Corp. (NYSE: SF), Zhang focuses on cross-border M&A between Chinese and U.S.-based companies.
Patrick Paige was named CEO at Ardian-backed HDT Automotive, a fluid-handling systems provider. Paige was most recently the CEO of fastener maker Acument Global Technologies.
David Wheat has joined Kirkland & Ellis' Houston office as a partner. Formerly with KPMG, Wheat concentrates on tax matters in M&A, particularly in the energy sector.
In a nod to Meghan Markle and Prince Harry’s royal wedding at St. George’s Chapel, Windsor, on Sat. May 19, Mergers & Acquisitions takes a look at 5 private equity firms headquartered in London: 3i, BC Partners, Bridgepoint Capital, Cinven and CVC. Check out our slideshow. Markle, who was born in Los Angeles, has made an impact on the world since she was 11, when her letters to Procter & Gamble Co. (NYSE: PG), covered by the local news, persuaded the consumer goods company to change its Ivory dishwashing soap commercials to say “people” instead of “women” were “fighting greasy pots and pans.” Prior to her engagement, Markle, who is biracial and divorced, was best known as the character Rachel Zane on the Suits TV series and the star of two Hallmark movies: When Sparks Fly; and Dater's Handbook. Markle is also well known for philanthropy. The royal wedding creates a “charity power couple,” declares the Chronicle of Philanthropy, citing Markle’s advocacy of women’s healthcare and work with the United Nations in Africa. “In lieu of wedding gifts, the couple has asked for donations to seven small organizations focused on women’s health, the environment, children of veterans, and more,” points out the publication.
Read full coverage of Mergers & Acquisitions' 11th annual M&A Mid-Market Award winners: Campbell Soup, Huron Capital, Idera CEO Randy Jacops, LLR Partners, McGuireWoods, Stryker, Twin Brook and William Blair.