M&A wrap: Farm Boy, Empire, Berkshire Partners, Arby's, Sonic, Michael Kors
Canadian retail giant Empire Company Ltd. (TSE: EMP.A) has agreed to buy fast-growing farm-to-table grocer Farm Boy for $800 million from Boston private equity firm Berkshire Partners LLC and the target’s management shareholders, in a deal that provides an enviable recipe for success in today’s challenging retail environment. Stellarton, Nova Scotia-based Empire owns grocery store chains Sobeys and FreshCo and drugstore chain Lawtons. Earlier in 2018, Sobeys teamed with Ocado Group plc, based in Hatfield, U.K., to bring Ocado’s online grocery ordering, automated fulfillment and home delivery services to Canada. "Farm Boy is a superb strategic and financial acquisition,” says Empire CEO Michael Medline in a statement. “It strengthens our reach in the key Ontario and [Greater Toronto Area] markets, it will be a growth vehicle in urban and suburban markets, and its very strong private label program will bolster our Ocado-driven e-commerce business. Farm Boy has a best-in-class brand with stellar customer loyalty. Its fresh, ready-to-eat and private label offerings are particularly appealing to urban and suburban consumers – it truly is 'all about the food' at Farm Boy,” a reference to the chain’s marketing slogan. “We believe we will be able to build on their historical industry leading same-store sales growth of 5.3 percent and five-year Ebitda CAGR of 21 percent to double the size of the business in the next five years," Medline continues. Since opening its first store in 1981 in Ottawa, Farm Boy has grown to 26 locations across southeastern Ontario, most recently opening its first stores in the Greater Toronto Area. Farm Boy founder and co-CEO Jean-Louis Bellemare, and Jeff York, who has been co-CEO of since 2009, will continue in their roles, managing the business separately from Empire's broader operations and reporting directly to Medline. Greenhill & Co. Canada Ltd., Scotiabank and KPMG LLP acted as financial advisors to Empire, and Stewart McKelvey, Stikeman Elliott LLP, and Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal advisors.
"Data and artificial intelligence are necessary conditions for private equity today,” says J. Taylor Crandall, a managing partner and a founding member of Oak Hill Capital Partners,which began investing in 1986 as the family office for Robert Bass, one of four brothers who founded Bass Brothers Enterprises, based in Fort Worth, Texas. “Historically, the data wasn’t available. Businesses were run on visceral intuitions. Now, the data is readily available and exponentially created. Every time you click on the Internet, it’s creating data for somebody to analyze how to run their businesses better. Data analytics is the low-hanging fruit to create value in every portfolio company we own.” For more, read the full story: Due diligence meets big data: Two Six Capital, Oak Hill, Clarion among pioneers.
Mergers & Acquisitions has opened up the nomination process for the 2019 edition of The Most Influential Women in Mid-Market M&A. Efforts to recruit and retain women in the financial services industry have increased in recent years; nevertheless, women still make up only about 14 percent of dealmakers in the middle market. By identifying and featuring dozens of influential women, Mergers & Acquisitions nurtures the community of female leaders and provides role models for women who are at earlier stages of their careers. To be considered, candidates must be women who are outstanding dealmakers both inside and outside of their firms. Evidence of influence in the broader M&A industry is essential. When nominating a candidate, please explain how she outperforms her colleagues at her firm and in the industry. Please provide examples of deals she has led, initiatives she has launched and other instances that show evidence of her influence in the middle market. While considering the merits of candidates, it’s helpful to read about women who have met our criteria in the past, such as Kainos Capital co-founder Sarah Bradley, who graced our 2018 cover. See the profiles of 35 women in our previous edition. Nominations must be received by Monday, October 15, 2018. Click here to learn more about the criteria and to submit a nomination.
Arby’s operator Inspire Brands Inc. is acquiring fast-food chain Sonic Corp. (Nasdaq: SONC) for about $2.3 billion as the fast-food burger wars heat up. Inspire, whose chains also include Buffalo Wild Wings and Rusty Taco, will continue to operate Sonic as an independent brand. Sonic is the latest struggling chain to be acquired by Inspire, which is credited with mounting a turnaround at sandwich chain Arby’s. Sonic has been squeezed by competition from larger rivals Burger King and McDonald’s Corp. (NYSE: MCD), Bloomberg News reports. Roark Capital bought Buffalo Wild WIngs in 2017 for $2.4 billion. Read the full story: Roark-backed Inspire Brands buys fast-food chain Sonic.
Michael Kors Holdings Ltd. (NYSE: KORS) is buying Italian fashion label Gianni Versace SpA for 1.83 billion euros ($2.2 billion), bringing the American luxury company closer to its goal of becoming an international house of fashion brands. The company said it plans to increase Versace’s sales to $2 billion annually, more than double the current level, expanding the number of stores globally to 300 from about 200 and accelerating e-commerce development. Read the full story: Michael Kors buys fashion label Versace.
Permira and Spectrum Equity-backed WeddingWire Inc., is purchasing XO Group Inc. (NYSE: XOXO), the owner of wedding planning site The Knot, for $933 million. Allen & Co., and Wachtell, Lipton, Rosen & Katz are advising XO Group. J.P. Morgan Securities LLC (NYSE: JPM) is advising WeddingWire. Jefferies and RBC Capital Markets are advising Permira. Fried, Frank, Harris, Shriver & Jacobsen LLP and Wilson Sonsini Goodrich & Rosati are representing Permira and WeddingWire.
GrubHub Inc. (NYSE: GRUB) is acquiring Tapingo, an online platform for campus food ordering, for $150 million. Kirkland & Ellis LLP and Fischer Behar Chen Well Orion & Co. are advising GrubHub. JMP Securities, Herzog, Fox & Neeman, and Silicon Legal Strategy are advising Tapingo.
Luminate Capital Partners-backed AMTdirect has acquired NETfacilities Inc., a provider of facilities management software to the education, healthcare and hospitality industries. Luminate was founded by former Silver Lake partner Hollie Haynes.
Investment firm Cimpress NV (Nasdaq: CMPR) is acquiring BuildASign, an Internet-based provider of canvas-print wall décor and business signs, for $280 million.
Kraft Heinz Canada, a subsidiary of Kraft Heinz Co. (Nasdaq: KHC) is buying Canadian coffee roaster Ethical Bean Coffee. "The acquisition of Ethical Bean Coffee reinforces our pledge to the sustainable health of our people, our planet and our company," says Kraft Heinz Canada president Carlos Piani.
HID Global has purchased Crossmatch, a provider identity security services. O'Melveny represented HID.
Post Capital Partners is buying transportation and logistics company Smith Transportation Services LLC. BDO and Winston & Strawn LLP are advising Post. Cross Keys Capital is advising the target. Patriot Capital is providing financing.
Royal Philips (NYSE: PHG) has acquired Blue Willow Systems. The target offers high-performance wireless sensor networks for life-safety systems in senior living communities. AGC Partners advised Blue Willow.
Westlake Chemical Corp. (NYSE: WLK) is purchasing chemical compounder Nakan from OpenGate Capital for $265 million.
Victory Capital (Nasdaq: VCTR) is buying derivative asset management firm Harvest Volatility Management LLC. The target has about $12 billion in assets. Seward & Kissel LLP is advising Harvest.
The LA Business Conference, hosted by ACG Los Angeles and held Sept. 25-26, at the glamorous Beverly Hilton Hotel in Beverly Hills, features speakers, including: Sir Richard Branson, founder, Virgin Group; Peter Guber, CEO, Mandalay Group and owner of the Golden State Warriors and co-owner of the Los Angeles Dodgers; John Hennessy, chairperson of Alphabet Inc. (Nasdaq: GOOGL), parent company of Google, and the former president of Stanford University; and Therese Tucker, the CEO of enterprise software developer BlackLine.
M&A East, hosted by ACG Philadelphia and held Oct. 24-25, at the Pennsylvania Convention Center in Philadelphia, brings together 1,300 top strategic and financial dealmakers and leading middle-market advisors for deal sourcing and networking. Featured speakers include Walter Robb, former CEO Whole Foods, and Chris Voss, former FBI lead hostage negotiator. The Women in Dealmaking session will focus on Women in the Board Room.
Exponent Evening with Tequila Casa Dragones, hosted by Exponent Women LLC, a networking group for female dealmakers, held Oct. 25 at The Dream Downtown in New York, features tequila, food and a conversation between Bertha Gonzales Nieves, co-founder and CEO of Tequila Casa Dragones, and Mary Kathleen Flynn, editor-in-chief of Mergers & Acquisitions. For more on networking group’s previous event, see Exponent drew 200 women dealmakers to event featuring Sallie Krawcheck.
Barbara Edwards was hired by Akerman as a partner, working with private equity clients. She was most recently with Shearman & Sterling.
Katey Kalvelage has joined Bregal Partners as director of e-commerce where she is leading digital growth for portfolio companies in the consumer, food, and retail sectors. Kalvelage previously managed the e-commerce businesses at retail brands such as Burberry, La Perla and Bottega Veneta.
Scott Kirk has been hired by Yellow Wood Partners as an operating partner, focusing on the consumer sector. Kirk was previously the chief financial officer and chief operating officer at personal care products company High Ridge Brands.
Paulo Mota has joined Alvarez & Marsal's global transaction advisory group in Brazil as a managing director. He was most recently with KPMG.
Meredith Pflug was hired by Azalea Capital as chief compliance officer and controller, where she is responsible for financial reporting, risk management, and the oversight of all regulatory compliance for Azalea and its investment partnerships. She was previously with KPMG.
Food & beverage M&A offers plenty of mouth-watering deals. Giants Coca-Cola Co. (NYSE: KO) and PepsiCo Inc. (Nasdaq: PEP) update their product lines with healthy offerings, while private equity firms, such as Brynwood Partners, breathe new life into tried and true brands, like Pillsbury. And lots of buyers experiment with meal kits and delivery methods, fueling M&A. Read the full story: 9 food & beverage companies loved by consumers and dealmakers alike.
Strategic buyers leverage data, sell more snacks and cater to seniors. Mergers & Acquisitions outlines the M&A strategies of 8 corporations, including Best Buy, Energizer, Fortune Brands, Hershey, Nike, P&G, Stanley Black & Decker and Tyson Foods. See the full story: Best Buy, Hershey, Nike, P&G and more wield M&A to grow.
Tyson Foods Inc. (NYSE: TSN), the owner of Hillshire Farm, wants to “feed the world” with its protein brands and will seek acquisitions to help. How Tyson is focusing on what it does best through M&A.
Between 70 and 80 percent of all M&A integration projects fall short of delivering anticipated value. This isn't because the acquisition target is somehow subpar, it's because the acquiring firm lacks a strong integration strategy. Read the full story: How to accelerate value in the first 100 days after an acquisition.
Why investors like diversity. "Companies that are inclusive and also diverse tend to outperform companies that aren't," says investor Lorine Pendleton of Pipeline Angels and Portfolia in this video interview shot at Exponent Exchange, a gathering of 200 female dealmakers. Watch the full video: M&A Insights: Inclusion investing.