M&A wrap: Nike, Foot Locker, Carlyle, TA, Church & Dwight, Bain, TH Lee

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Nike Inc. (NYSE: NKE) wins Mergers & Acquisitions' 2018 M&A Mid-Market Award for Strategic Buyer of the Year. In 2018, Nike acquired two innovative companies in order to help speed up the athletic apparel maker’s digital strategy. In March, Nike bought Zodiac Inc., a consumer data analytics firm based in New York and Philadelphia. And then in April, Nike bought Invertex Ltd., a Tel Aviv, Israel-based pioneer in the use of 3D scanning technology to customize shoes. “We’re adding world-class data-science talent and best-in-class tools to power 1:1 relationships with consumers through digital and physical consumer experiences,” Nike chief digital officer Adam Sussman told investors on an earnings call in March 2018. “Nike’s ambitious digital transformation is driving strong results and momentum in North America and in our international geographies,” Nike CEO Mark Parker said in a December earnings call about the company’s fiscal 2019 second quarter. Nike reported a 13 percent increase in diluted earnings per share, driven by double-digit revenue growth, gross margin expansion and a lower average share count, partially offset by higher selling and administrative expenses and a higher effective tax rate. “We’re incredibly energized about 2019 – with a full innovation pipeline; the most personal, responsive retail experiences in the industry; and a supply chain that’s delivering speed at scale.”

Excelled. Innovated. Inspired. That’s what the eight winners of Mergers & Acquisitions’ 12th Annual M&A Mid-Market Awards did in 2018. Our awards honor the leading dealmakers and deals that set the standard for transactions in the middle market. In addition to Nike, award winners include: Fortive, TA Associates, the Riverside Co., Harris Williams, Goodwin and Luminate Capital Partners' Hollie Haynes. Read our full coverage: Meet the winners of the M&A Mid-Market Awards: Nike, Fortive, TA, Harris Williams.

Related: Read more about Mergers & Acquisitions' three annual special reports, including the M&A Mid-Market Awards, the Rising Stars of Private Equity, and the Most Influential Women in Mid-Market M&A.

Deal news
The Carlye Group (Nasdaq: CG) and TA Associates have bought Weiman Products, a maker of commercial and consumer cleaning supplies, from the Cortec Group. Weiman's consumer brands include: Weiman, Goo Gone, Magic, Stone Care International, Wright’s and Gonzo Natural Magic. Advisors to Weiman include: Baird, Duff & Phelps and Jones Day. The buyers are being advised by: Sawaya Partners, Kirkland & Ellis and Goodwin.

Church & Dwight Co. (NYSE: CHD) is buying women's hair removal brands Flawless and Finishing Touch for up to $900 million. Church & Dwight is paying $475 in cash and up to $425 million in an earnout. Bank of America Merrill Lynch is advising Church & Dwight. The sellers are being advised by Jones Day.

Bain Capital Private Equity is buying a majority stake in Maesa, a beauty brand incubator that supplies retailers and beauty companies. Maesa was advised by Financo. Advisors to Bain include: Lazard And RBC Capital Markets.

Global Icons has acquired retailer Fred Segal. O'Melveny represented the buyer.

Thomas H. Lee Partners has invested in Fortna. The target provides distribution strategy, operations design and implementation, material handling automation and warehouse execution software systems. Advisors to Fortna include: Citi and Morgan Lewis & Bockius. Advisors to Thomas H. Lee include: Kirkland & Ellis and PwC.

ON Semiconductor Corp. (Nasdaq: ON) is buying WiFi technology company Quantenna Communications Inc. (Nasdaq: QTNA). O'Melveny is advising Quantenna.

Nord Holding has acquired a majority stake in ophthalmic practice group Zentrum Gesundheit from Waterland Private Equity.

People moves
Karsten Langer has been promoted to managing partner at The Riverside Co. He joined Riverside in 2006.

Deal trends
Successful acquirers focus on the importance of middle managers, finds The Leadership Factor in Mergers & Acquisitions, a report conducted by The Conference Board’s Human Capital Practice, written by Amy Lui Abel, Marion Devine and J. Keith Dunbar. "The findings suggest that companies need to pay far greater attention to assessing middle managers in the acquired business for specific leadership skills and behaviors most important for M&A success," explains Dunbar. Research for the report included a survey and follow-up interviews with members of The Conference Board as well as non-members. The Conference Board includes 1,200 companies in both the established and emerging markets of the world.

Featured content
The way consumers shop continues to change. Customers want to put their own touch on products, not wait too long for them and in most cases, never step foot in a store to buy them. Apparel and sneaker retailers, such as Nike Inc. (NYSE: NKE), the winner of Mergers & Acquisitions' 2018 Mid-Market Award for Strategic Buyer of the Year, and Foot Locker (NYSE: FL) and Nike Inc. (NYSE: NKE), are embracing these challenges by snatching up companies that help provide customized products to customers. Read the full story: Sports retailers Nike, Foot Locker buy digital startups to help customize sneakers.

The NCAA Tournament is down to the Sweet 16, with all four No. 1 seeds, including overall No. 1 seed Duke University remaining in the Sweet 16. No. 1 seeds Gonzaga, Virginia, play Thursday night. This year, March Madness offers fans unprecedented access to online betting, thanks to a May 2018 U.S. Supreme Court ruling. More Americans are expected to place bets on the college basketball tournament than the Super Bowl, with the American Gaming Association's predicting that about $8.5 billion in wagers will be placed on the tournament. Online betting and data companies, including sportsbooks from DraftKings, FanDuel and Caesars, are drawing basketball fans and interest from investors. M&A is rampant throughout the sector. Here's a look at recent online gaming and sports data deals.

Related: March Madness: DraftKings, FanDuel, Action Network draw fans, dealmakers.

What’s driving adaptive reuse, and how can private equity tap into this increasingly common but misunderstood and under-analyzed property segment? Adaptive reuse, which involves repurposing a building designed originally for something else, is fast becoming a global phenomenon; from turn-of-the-century warehouses to castles to train stations, developers and investors have untapped enormous value from obsolete building stock.

Related: Why private equity investors should consider adaptive reuse.

Technology M&A is thriving, and private equity firms are hot on the trail of innovations that will drive sustainable value to customers and make companies more efficient, more effective and less expensive to run. Among the developments appealing to PE investors are: artificial intelligence, data management, data virtualization, digital marketing, healthcare IT, industrial automation, the Internet of Things, machine-to-machine learning, payment processing and Software-as-a-Service. To gain more insights into what kinds of tech deals will dominate the field in 2019, Mergers & Acquisitions reached out to 10 private equity firms that are active investors in technology: Francisco Partners, Genstar, Great Hill, HGGC, Insight, LLR, Riverside, Silver Lake, TA and Vista.

Related: 10 private equity firms share strategies for tech M&A.

In Mergers & Acquisitions' annual look at strategic buyers, we see significant deals aimed at enhancing the customer relationship, including Amazon.com Inc.'s (AMZN) purchase of PillPack, Nike Inc.'s (NYSE: NKE) acquisitions of Invertex Ltd. and Zodiac Inc. and Target Corp.s' (NYSE: TGT) acquisition of Shipt. Technology plays a key role in many transactions. But while technology is enabling developments, it’s not an end unto itself for many corporations. Instead, strategic buyers are using innovations as a means to achieve goals. Based on analyzing hundreds of recent deals, Mergers & Acquisitions has identified seven goals corporate dealmakers hope to accomplish through M&A transactions today: Integrate data with software; improve the customer experience and relationship; expand and improve distribution; process payments more efficiently; leverage tech trends, like autonomous vehicles; make manufacturing processes more efficient; and achieve better outcomes and efficiencies in healthcare. “Strategics have been really active,” says John Neuner, managing director, Harris Williams. “They are aggressive in pursuing the assets they want, as long as it fits within their strategy. Scale is critical to them, and they have to meet consumer demands by adding new capabilities.”

Related: 7 reasons why smart companies Amazon, Nike, Target are doing M&A.

Mergers & Acquisitions profiles the top 28 investment banks of 2018, with KPMG, Houlihan Lokey, Goldman Sachs (NYSE: GS), William Blair and Lincoln International ranking as the five most active investment banks in private equity-backed deals. The list is based on volume of completed PE-backed deals, with PitchBook as the data provider. It was a good year for dealmaking, with activity in the U.S. middle market exceeding $400 billion, the first year to achieve the milestone.

Related: Top investment banks in PE-backed deals: KPMG, Houlihan, GS, William Blair
Related: M&A soared in 2018; companies confident about dealmaking in 2019.

Mergers & Acquisitions has named 36 leaders the 2019 Most Influential Women in Mid-Market M&A, including Kainos Capital's Sarah Bradley, Kayne Anderson Capital Advisors' Nishita Cummings and Pelham S2K Managers' Venita Fields. All 36 are outstanding dealmakers both inside and outside of their firms. This year, we asked the featured dealmakers to tell their own stories through Q&As, including their advice for women.

Related: Meet the 2019 Most Influential Women in Mid-Market M&A.

Events
Exponent Women LLC is hosting an evening of networking and conversation with leading economists at the New York office of Alliance Bernstein on April 4. Speakers include Lindsey Piegza, chief economist, Stifel Fixed Income, and Kathleen Fisher, head of wealth and investment strategies, Alliance Bernstein.

InterGrowth 2019 is taking place from May 6-8 at the Waldorf Astoria & Hilton Bonnet Creek in Orlando, Florida.

Innovation Works is holding its second annual AI/Robotics Venture Fair in Pittsburgh from on May 15 and 16.

ACG Chicago is hosting the Midwest Capital Connection at The Marriott Downtown Magnificent Mile from May 21-22.

ACG New York, ACG Boston and ACG Philadlephia are holding the Industrial Conference with Value Creation at the Infor in New York on June 6. The event is part of the Northeast Industry Tour.

ACG Minnesota is hosting the The Upper Midwest ACG Capital Connection at the Renaissance Minneapolis Hotel, The Depot from June 10-11.

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