M&A wrap: Simply Good, Atkins, Quest, Splunk, Genstar, Dick's, Sheridan

atkins
Endulge brand low-carb ice cream, made by Atkins Nutritionals Inc., sits on display at an Associated Supermarket in New York on March 22, 2004. More food makers are jumping to meet consumer demand for lower-carbohydrate foods even as executives question the longevity of the Atkins diet trend. Photographer: Daniel Acker/Bloomberg News.

Atkins owner Simply Good Foods Co. (Nasdaq: SMPL) is buying healthy foods maker Quest Nutrition for about $1 billion. Quest makes protein bars, cookies, chips and pizza under its own brand that have high protein levels and low sugars. “The acquisition of Quest strengthens Simply Good Foods’ position within the nutritional snacking category by expanding our portfolio of brands and product offerings while also providing us with greater consumer and channel diversification,” says Simply Good CEO Joseph Scalzo. "This combination delivers on our strategy to become a broader nutritional snacking company that offers consumers a broad range of brands and products that satisfy their nutritional needs." In addition to Atkins, Simply Good also sells products under the Atkins Endulge and SimplyProtein brands. Food conglomerates are diversifying their product lines to appeal to consumers who are opting for healthier snacks. Earlier in 2019, PepsiCo Inc. (Nasdaq: PEP) bought the Muscle Milk brand from Skippy peanut butter maker Hormel Foods Corp. (NYSE: HRL) and in 2018, Hershey Co. (NYSE: HSY) purchased Pirate Brands from B&G Foods Inc. (NYSE: BGS). Advisors to Simply Good include: Centerview Partners, Goldman Sachs (NYSE: GS) and Kirkland & Ellis. Advisors to Quest include: J.P. Morgan Securities (NYSE: JPM) and Winston & Strawn.

DEAL NEWS
Splunk Inc. (Nasdaq: SPLK) is buying SignalFx, which provides Software-as-a-Service real-time monitoring and metrics for cloud infrastructure, for $1.05 billion. “Data fuels the modern business, and the acquisition of SignalFx squarely puts Splunk in position as a leader in monitoring and observability at massive scale,” says Splunk CEO Doug Merritt.

Genstar Capital-backed sports technology company Stack Sports has acquired Affinity Sports and Blue Sombrero from Dick's Sporting Goods (NYSE: DKS). Affinity Sports provides software management technology to youth sports. Blue Sombrero is a provider of websites, registration, and league management tools for youth sports organizations.

Helmerich & Payne Inc. (NYSE: HP) has purchased DrillScan, a provider of drilling engineering software for the oil and gas center. Skadden, Arps, Slate, Meagher & Flom LLP advised the buyer. Archers-AARPI advised the target.

New Mountain Capital is buying Ontario Systems, a provider of enterprise software that automates complex workflows, from Arlington Capital Partners. Ropes and Gray and Eir Partners are advising New Mountain.

Cache Creek Industries has partnered with Rockmont Capital Partners to acquire Brandywine Communications Inc. The latter designs and manufactures precision time and frequency products that are used on satellite hubs, naval vessels and military aircrafts. Cache Creek was advised by Calfee, Halter & Griswold LLP. Financing was provided by Academy Bank, Medallion Capital and Spell Capital Mezzanine.

New State Capital Partners has acquired a majority stake in CDS. The target offers installation, implementation, support, training and data center administration services. Piper Jaffray & Co. (NYSE: PJC) and Morgan Lewis advised New State. Financing was provided by Crystal Financial LLC.

Sheridan Capital Partners has invested in Oral Surgery Partners, which operates oral surgery clinics throughout Missouri. Advisors to the target include: Fortune Group and Lathrop Gage LLP. The advisor to Sheridan is McDermott Will & Emery LLP. Financing was provided by Twin Brook Capital Partners.

PLZ Aeroscience Corp. has acquired Precise Packaging Trive Capital. Precise is a manufacturer of small-format aerosol and liquid products for the personal care and home fragrance sectors.

DEAL TRENDS
More U.S. states are legalizing sports gambling, providing a huge opportunity for payments companies that have been fattened by multibillion-dollar mergers. Sports betting is a prime revenue source, given its volume in the U.S. alone is expected to expand from $104 billion in 2017 to $155.5 billion 2024, according to Zion Research. Both FIS and Fiserv hope to use acquired gaming technology from Worldpay and First Data, respectively, to navigate the complicated payment processing, risk and regulatory requirements of sports betting. Read the full story: Giants of payments chase sports gaming's $155 billion jackpot.

Restaurants, a typical bellwether of broader economic issues, are giving some banks fits. Eateries are heavily dependent on consumer spending, affordable labor and manageable costs for raw goods. All of those areas are under scrutiny as pundits debate the timing of the next economic slowdown. Several banks have reported issues tied to restaurant bankruptcies this year, including Cadence Bancorp., First Financial Bancorp. and Equity Bancshares. Read the full story: Restaurant business is giving lenders indigestion.

PEOPLE MOVES
Kegan Greene and Rob Freiman have joined investment bank Houlihan Lokey (NYSE: HLI) as directors, where they are focusing on the fintech sectors. They were both most recently with GCA Advisors.

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
“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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