M&A wrap: SK Capital, McDonald's, Nike, Dean Foods, Anheuser-Busch,
SK Capital Partners, a private investment firm that is focused on the lower middle-market chemicals, materials and pharmaceuticals sectors, has raised its first catalyst fund at $400 million. The fund will make investments with up to $50 million in equity, and will complement the firm's fifth fund, which was raised earlier in 2019 at $2.1 billion. “The SK Catalyst investment strategy will bring a significant level of industry expertise, global resources and scale to lower middle market businesses," says managing director Jon Borell. "We look forward to partnering with management teams in our industries to help them dramatically grow and improve their businesses.” SK Capital's portfolio generates more than $9 billion in annual revenue. The firm manages about $4.6 billion in assets. Earlier in 2019, SK Capital bought PolyOne Corp.'s (NYSE: POL) performance products and solutions business for $775 million. Kirkland & Ellis advised the firm on the fundraise.
Mergers & Acquisitions has launched a new weekly 7-part series on retail technology M&A. We’re kicking it off with an in-depth look at how the Internet of Things is transforming retail and how the trend is playing out in dealmaking. Nike (NYSE: NKE) is making acquisitions to enhance its customer experiences. Nike bought Zodiac and Invertex Ltd., a pair of innovative digital startups helping the athletic apparel maker get closer to customers. McDonald’s Corp. (NYSE: MCD), the world’s largest restaurant chain, is gobbling up digital startups to improve customer experiences by capitalizing on IoT innovations- a strategy new CEO Chris Kempczinski supports. The company is buying personalization company Dynamic Yield for a reported $300 million in its largest deal in more than 20 years, and will use the software to customize drive-thru menus. Check back every Friday throughout the holiday shopping season for a new installment.
Electronic parts produce Yageo Corp. is acquiring Kemet Corp. (NYSE: KEM) for about $1.8 billion. Kemet is a supplier of electronic parts, such as capacitors and sensors. Citi, Simpson Thacher & Bartlett LLP and Tsar & Tsai are advising Yageo. Goldman Sachs (NYSE: GS) and Skadden, Arps, Slate, Meagher & Flom LLP are advising Kemet.
Top U.S. milk processor Dean Foods Co. filed for Chapter 11 bankruptcy and is in advanced talks with Dairy Farmers of America Inc. about a potential sale. Losses have piled up after Dean’s biggest customer, Walmart Inc., built its own milk plant. Dean says it’s the largest U.S. processor of fresh fluid milk and other dairy products, but the company has been squeezed by fierce competition and the rising price of milk, which has eroded profit margins. Demand for cow milk has been weak, too, with nut milks and even bottled water cutting into its popularity. On top of that, retailers have been selling their own house brands of milk at a loss to increase store traffic, Hoai Ngo of Bloomberg Intelligence wrote in a note. Read the full story by Bloomberg News: Dean Foods files for bankruptcy.
Anheuser-Busch InBev is buying the majoirty stake it does not already own in beer brewer Craft Brew Alliance (Nasdaq: BREW) in a deal valued at $321 million. The target will join A-B's Brewers Collective, a portfolio of craft brewers spread throughout the U.S. "The beer industry in the U.S. is competitive and dynamic, with more choices available to consumers than ever before," says Brewers Collective president Marcelo Michaelis. Wachtell, Lipton, Rosen & Katz is advising CBA.
Liberty Hall Capital Partners-backed Bromford Industries has bought Numet Machining Techniques. The target is a supplier of engine parts, including alloys, for the aerospace and defense sector. Liberty Hall was advised by Gibson Dunn & Crutcher. The sellers were advised by Lincolin International and Benesch, Friedlander, Coplan & Aronoff. Financing was provided by Citizens Bank and Stellus Capital Management.
New Water Capital has invested in circuit board makers DataED and Bestronics. Canaccord Genuity Inc. advised DataEd and Lincoln International advised Bestronics.
Sverica Capital Management has invested in Gryphon Networks, a provider of sales perfomance management and compliance software.
Hyatt Hotels Corp. (NYSE: H) has emerged as a bidder for a portfolio of Kimpton hotels owned by Xenia Hotels & Resorts Inc., according to Bloomberg News. Xenia has received multiple offers for the portfolio, which could fetch about $500 million. Read the full story byBloomberg News: Hyatt bids on Xenia's Kimpton portfolio.
Yves de Balmann has joined technology-focused investment firm Bridge Growth Partners as an executive partner. Balmann is the former co-chairman of Bregal Investments.
Chris Cathcart and Scott Plumridge have been promoted to managing partners at PE firm the Halifax Group. Cathcart joined the firm in 2007, and Plumridge joined in 2005.
Daniel Hamburger was named CEO at Clearlake-backed software provider Provation Medical. Hamburger most recently served as CEO at Renaissance Learning.
Narendra Mulani was hired as a partner at healthcare-focused investment firm Chicago Pacific Founders, where he is focusing on leading digital and data strategies across the firm's porfolio companies. Mulani was previously with Accenture.
Norinchukin Bank is getting more picky about investing in collateralized loan obligations to obtain better returns, according to Bloomberg News. The agricultural lender has been piling into top-rated U.S. and European CLOs to make up for rock-bottom interest rates at home, making it a major investor in the $750 billion global market. Read the full story by Bloomberg News: Japan’s biggest CLO investor cools on market.
Esteemed M&A attorney Martin (“Marty”) Lipton was honored at a black-tie event hosted by the Institute of International Education at The Pierre in New York on Oct. 30. Called the “the king of M&A,” the co-founder of New York law firm Wachtell, Lipton, Rosen & Katz, is well known to dealmakers as the architect of the anti-takeover defense strategy known as the “poison pill.” Lipton was awarded the IIE Stephen P. Duggan Award for Mutual Understanding “in recognition of his lifetime of extraordinary achievement and his lasting contribution to international higher education. Read the full story: Martin Lipton, inventor of the “poison pill” anti-takeover defense honored by IIE.
It’s a milestone year for the Blackstone Group Inc. (NYSE: BX), which transitioned from a publicly traded partnership to a corporation on July 1. The New York firm announced the final close of its latest global real estate fund recently. With $20.5 billion of total capital commitments, Blackstone Real Estate Partners IX is the largest real estate fund ever raised. Mergers & Acquisitions spoke with Stephen A. Schwarzman, the firm’s co-founder, chairman and CEO. Read the full story: "Complete control" is the beauty of private equity, says Blackstone's Stephen A. Schwarzman.
The private equity model has held up very well over the decades, continuing to outperform the public markets, even as economic cycles come and go. But the rate of growth has slowed, leading PE firms to seek adjacent areas of business to expand. As PE firms face increased pressure to produce higher returns on their investments, many of them are turning to a familiar area of business: lending. Adams Street Partners, Balance Point Capital, Carlyle and VSS are all actively engaged in lending. Read the full story: Private equity firms are becoming lenders. Here’s why.
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.
Looking for a glimpse of what’s to come in the private equity industry? Meet Mergers & Acquisitions' 2019 Rising Stars of Private Equity. As the PE industry undergoes a generational shift, and many firm founders retire, it’s well worth getting to know these emerging leaders, including Branford's Austin Collier, Sterling Partners' Shawn Domanic and Summit Partners' Sophia Popova. 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.
Online retailers, including Amazon.com Inc. (Nasdaq: AMZN), are adding more fulfillment centers to meet consumer demands for faster shipping times. The owners of these properties along with the contractors that build them are becoming prime M&A targets. More local fulfillment centers means faster delivery times and lower last-mile costs to both retailers and customers. Read the full story: Amazon and Walmart open more logistics centers, driving warehouse M&A.
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.
In New York, it’s Middle Market Week. The 17th Annual Private Equity Wine Tasting Gala takes place on Nov. 13 at Gotham Hall. The PE roundtable series is being held on Nov. 14, and the breakfast program takes place on the same date at the Winston & Strawn offices.
Exponent Women is hosting a Family Office Event with Owens Group at LX Gallery in New York on Nov. 21. Mergers & Acquisitions editor-in-chief Mary Kathleen Flynn is moderating a panel.