M&A wrap: Littlejohn, Kaman, Amgen, Celgene, Liberty Tax

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Littlejohn has completed its $700 million acquisition of Kaman Corp.'s (NYSE: KAMN) distribution business. “Kaman Distribution builds upon Littlejohn’s deep expertise investing in the distribution and industrial sectors,” says Tony Miranda, managing director of Littlejohn. “We have long admired Kaman Distribution, a market-leading provider of products and solutions to its customers as well as a trusted partner to its suppliers, and look forward to working closely with management to further invest in the business and drive growth, both organically and via acquisition." The target supplies electro-mechanical, bearings, power transmission and fluid power parts. Kaman is a designer and manufacturer of parts, structures and systems for the aerospace, industrials, military and sectors. “The completion of the sale of our distribution segment marks a return to Kaman’s roots as a highly focused aerospace and engineered products company,” says Kaman CEO Neal Keating. “With a stronger balance sheet and increased financial flexibility, Kaman is well positioned to invest in new technologies, to deliver innovative solutions that meet our customers’ needs, and to pursue strategic acquisition opportunities that will accelerate our future growth.” Advisors to Kaman include: Baird, J.P. Morgan and K&L Gates. The legal advisor to Littlejohn is Gibson Dunn. Financing is being provided by Antares, Bank of Montreal and Jefferies.

DEAL NEWS
Philip Morris International Inc., the maker of Marlboro cigarettes in overseas markets, is in talks to reunite with Altria Group Inc. more than 10 years after the tobacco giants split their operations. Read the full story by Bloomberg News: Marlboro maker Philip Morris in talks to reunite with Altria.

Amgen Inc. (Nasdaq: AMGEN) will pay $13.4 billion for a blockbuster psoriasis drug from Celgene Corp. (Nasdaq: CELG), which is shedding the asset in order to win antitrust regulators’ sign-off for its $74 billion merger with Bristol-Myers Squibb Co. (NYSEL BMY). The all-cash deal will give Amgen a growing product at a time when the blockbuster biotechnology drugs it made its name on are beginning to fade. Read the full story by Bloomberg News: Amgen buys Celgene drug in antitrust sale.

Liberty Tax Inc., the owner of Liberty Tax Service, is buying Sears Hometown’s Outlet business for up to $133 million. Sears Hometown sells home appliances, hardware, tools and lawn and garden equipment that are either overstocked, discontinued, scratched or dented at significant discounts. The deal is part of Liberty Tax's strategy of diversifying by buying retail chains. "This is a continuation of Liberty Tax's strategy of identifying and acquiring franchised or franchisable businesses while also building scale at attractive acquisition valuations," says Liberty Tax chairman Andrew Laurence. The company recently reached a deal to purchase the Vitamin Shoppe for $208 million. PJ Solomon and Shearman & Sterling are advising Sears Hometown.

Sentinel Capital Partners has invested in SSJA Bariatric Management, a provider of administrative support services to weight loss surgery offices in New York.

Warburg Pincus is buying a majority stake in electronic medical record and practice management software company WebPT from Battery Ventures. Aeris Partners is advising the sellers.

Clearlake-backed Sunbelt Supply has acquired Severe Service Specialists, a provider of flow control services for the industrials and power generation sectors.

BP Plc agreed to sell its entire business in Alaska to closely held Hilcorp Energy Co. for $5.6 billion, ending a six-decade presence in the state as oil production there declines. Read the full story by Bloomberg News: BP exits Alaska after 60 years.

RISING STARS
Looking for a glimpse of what’s to come in the private equity industry? Meet the 10 dealmakers named by Mergers & Acquisitions as the 2019 Rising Stars of Private Equity:

Austin Collier, Branford Castle Partners
Kevin Cunningham, LNC Partners
Shawn Domanic, Sterling Partners
Stephen Jeschke, GTCR
Danielle Lalli, Huron Capital
Jason Mironov, TA Associates
James Oh, Transom Capital Group
Sophia Popova, Summit Partners
Pavan Tripathi, Bregal Sagemount
Christine Wang, Francisco Partners

The Rising Stars share a common set of core values. They are passionate about building companies. They are naturally curious and interested in changing things for the better. They enjoy working with portfolio company managers, investment bankers and other deal team members. They appreciate the responsibility and autonomy their firms have given them. They are grateful for the leaders who have helped shape their careers, and they are generous with their own time when it comes to nurturing the next generation. As the PE industry goes through a generational shift and many firm founders retire, it's well worth getting to know these emerging leaders. They represent the future of private equity. For profiles and video interviews, see Meet Mergers & Acquisitions' 2019 Rising Stars of Private Equity For Q&As, see 10 Rising Stars of Private Equity tell their tales.

MORE FEATURED CONTENT
Prokanga is a unique recruiting firm that offers full-time and flexible recruiting services. Prokanga is managed by co-founders Jamie Cheney and Lesley Finer (pictured). Mergers & Acquisitions spoke with Finer, who has more than 10 years of recruiting for the finance industry and leads the finance practice at Prokanga. For more, see Why financial services pros need flexibility

“We know that different people from different walks of life make us a better firm,” said Adam Miller, director of global talent management at the Riverside Co., which employs more than 200 people across four continents, including two female co-fund managers and a female chief operating officer. “We’re creating more opportunities for broader demographics.” Indeed, just about every private equity firm you talk to these days seems intent on becoming attractive to diverse candidates—whether it’s by hiring a chief diversity officer and loosening its dress code (KKR); giving employees flexible hours to spend more time with children (Riverside); offering up to 12 weeks of paid maternity leave and 16 weeks off altogether (ParkerGale); hosting weekly wine-and-cheese gatherings in the summer (Kinzie Capital); or providing on-site professional development and training (Riverside and ParkerGale). Check out: 5 hiring trends in private equity.

PE firms push for organizational innovation with a long-term view, and are structurally equipped to take a "move fast and /build/ things" approach. Read the full guest article by Chicago Pacific Founders' Matthew Doyle: Why private equity investors are hidden innovators.

BC Partners has joined the growing group of private equity firms selling a minority stake to another PE firm to fuel expansion plans. Earlier in August, the firm, which is headquartered in London with additional offices in New York, Paris and Hamburg, announced it had sold an interest in the firm to New York’s Blackstone Alternative Asset Management for undisclosed terms. PE firms increasingly are selling minority stakes to fund expansion plans. For more see, Why private equity firms sell stakes to other firms.

Dealmaking in August began with a bang, as the London Stock Exchange Group Plc agreed to snap up Refinitiv in a $27 billion blockbuster deal. And M&A was hopping in July, with observers predicting the third quarter will be an active one. Meanwhile, here is a table of middle-market deals that closed in the first half of the year, including 3M Co.'s (NYSE: MMM) purchase of MModal's technology business; Apollo Global Management LLC's (NYSE: APO) acquisition of Smart & Final Stores; and KPS Capital Partners' purchase of Brunswick Corp.'s (NYSE: BC) fitness business. For more see, 3M's purchase of MModal's tech business a highlight of H1 dealmaking.

Activity and urgency characterize the current dealmaking environment, say investment bankers and other M&A advisors interviewed by Mergers & Acquisitions. After a record-breaking 2018, forecasts for 2019 remain bullish. Advisors point to a lot of cash that must be deployed by strategic buyers and private equity firms alike; a healthy U.S. economy; and low interest rates. Competition for high-quality targets has never been more intense, especially for technology providers, they report, which means sellers are commanding high prices. It all adds up to a sellers' market. A mood of urgency prevails, as dealmakers seek to close deals quickly, while conditions remain favorable. The advisors interviewed for this story say they don’t see signs of a recession this year; however they are closely monitoring bellwethers, including corporate earnings, wage pressure, global supply chains and slowdowns abroad. They are recommending that clients be prepared for an economic slowdown in the next two years. Specialization is the name of the game, and investment bankers advise clients to seek targets with business-model stability, limited cyclical exposure and a recurring revenue business model. Technology, business services, healthcare, consumer and manufacturing are among the most promising sectors. Read the story: 8 M&A advisors urge closing deals now, while economy stays strong.

To celebrate deals, dealmakers and dealmaking firms, Mergers & Acquisitions produces three special reports every year: the M&A Mid-Market Awards; the Rising Stars of Private Equity; and the Most Influential Women in Mid-Market M&A. For more on the timeline and nomination process for each, see Special reports overview: M&A Mid-Market Awards, Rising Stars, Most Influential Women.

EVENTS
The Association of Asian American Investment Managers (AAAIM) is holding its annual conference from Sept. 4-5 at Convene at 730 Third Avenue in New York.

The Great Lakes ACG Capital Connection is being held at the Westin Book Cadillac Detroit Hotel in Detroit from Sept. 4-6.

ACG Boston and ACG Connecticut are hosting the 5th Annual ACG New England Fall Conference at Gurney's Newport Resort & Marina in Newport, Rhode Island from Sept. 17-18.

Exponent Women is hosting a fall rooftop networking session at RSM in New York on Oct. 7.

M&A East is taking place at the Pennsylvania Convention Center in Philadelphia from Oct. 22-23.

Third Annual Women in Alternative Investments Career Forum is taking place at the New York Hilton on Nov. 8.

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