M&A wrap: Toro, Charles Machine, Amazon, Rivian Automotive, Pentair, Mason Wells

ditchwitch

Agriculture and construction equipment maker Toro Co. (NYSE: TTC) is buying equipment manufacturer Charles Machine Works Inc. for $700 million. The target produces horizontal directional drills, walk and ride trenchers, utility loaders, vacuum excavators and asset locators for the infrastructure and construction sectors. Charles Machine generated $725 million in revenue in 2018. Some of Charles Machine's brands include: Ditch Witch, Subsite Electronics, DW/TXS, HammerHead, Radius HDD, American Augers, Trencor and MTI. "The company expands our business in a meaningful way in an adjacent category we know well through our own specialty construction business and in a market that is attractive given the potential for growth in addressing both aging infrastructure that is currently in place and new infrastructure that will be needed to support next generation technologies like 5G," says Toro CEO Richard Olson. Advisors to Toro include: J.P. Morgan Securities LLC (NYSE: JPM), Fox Rothschild and Latham & Watkins. Advisors to Charles Machine include McAfee & Taft A Professional Corp. Financing for the deal is provided by: Bank of America Merrill Lynch and J.P. Morgan Chase Bank.

Deal news
Amazon.com Inc. (Nasdaq: AMZN) is leading a $700 million equity investment in Rivian Automotive LLC, an electric pickup and SUV maker preparing to deliver its first vehicles next year. The deal comes after Amazon participated in a $530 million funding round for self-driving startup Aurora Innovation Inc. Read the full story from Bloomberg News: Amazon invests in electric truck maker Rivian.

Pentair plc (NYSE: PNR) has bought water equipment manufacturer Aquion from Mason Wells for $160 million. Robert W. Baird and Quarles & Brady advised Aquion.

Beecken Petty O'Keefe & Co. has acquired a majority stake in Health-E Commerce, the owner of pre-tax health and wellness shopping sites FSAstore.com, HSAstore.com and WellDeserved. Financo and O'Melveney & Myers LLP advised the target. Paul Hastings advised Beecken.

Airbus SE will swell its fleet of Beluga XL wing transporters to six aircraft and is beginning to sound out potential buyers for the original version of the bulbous model. Read the full story from Bloomberg News: Airbus to sell original 'White Whales.'

For more deal announcements, see The weekly wrap: Ingersoll-Rand, Staples, Thoma Bravo, Ellie Mae.

For more on PE fundraising, see PE fundraising scorecard: Ardian, Delphi, Falfurrias.

Featured content
Mergers & Acquisitions has closed the nomination process and is now looking forward to announcing the 2018 winners of the M&A Mid-Market Awards in March. The Awards are one of three special reports we produce each year to celebrate deals, dealmakers and dealmaking firms. The other two are The Rising Stars of Private Equity and The Most Influential Women in Mid-Market M&A.

Related: For a look at the three special reports, including timelines and criteria for nominations, see Special reports overview: M&A Mid-Market Awards, Rising Stars, Most Influential Women.

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.

Mergers & Acquisitions asked leading dealmakers about their outlook for the middle market in 2019. Watch the video conversations, shot at ACG Philadelphia's M&A East: It is a seller's market, and deal activity is expected to remain steady, says Ramsey Goodrich of Carter Morse & Goodrich: Outlook 2019: Great time to sell. Private equity firms and strategic buyers will use their excess cash and capital to look for deals, says Bharat Ramprasad of Stifel Nicolaus: Outlook 2019: Excess capital to fuel M&A. Rising interest rates and regulatory changes may increase volatility, cautions Mark Emrich of Murray Devine: Outlook 2019: Keep an eye on rising interest rates.

Bank volume was steady, but deal values would have been the lowest in years if not for one big, and very intriguing, transaction. For more, see: Bank M&A: What January data hints about 2019.

Not only do carve-outs account for 10 percent of all M&A activity, the percentage of carve-outs conducted by buyout firms (as opposed to strategic buyers) is on the rise, and sharply at that. And that’s important, because, at the risk of overextending the curveball analogy, the carve-out is ‘filthy stuff.’ The inherent complexities of the deal can puzzle even serial acquirers. Write Accordion's Gary Appelbaum and Eric Salit in this guest article: Carve-out curveball: How to hit a home run.

Consumerization of healthcare, high-deductible health plans, and more self-payment by patients are contributing to the overall increased demand for PT services, write Battery Ventures general partner Chelsea Stoner in this guest article: Rising demand for physical therapy drives deals.

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
The SBIA and the AM&AA are hosting a Deal Summit at The Doral in Miami from Feb. 20-22. The gathering offers networking opportunities with senior-level M&A advisors and lower middle-market private equity investors.

ACG New York hosts the 11th Annual Healthcare Conference at the Metropolitan Club in Manhattan on Feb. 28. Dealmakers network with healthcare-focused private equity investors and other industry professionals.

ACG Minnesota and Corvus North are hosting AIM: A Women's Leadership Conference at the Minneapolis Hyatt on March 7. The conference is designed to support and encourage female leaders to grow and achieve success throughout their career journeys.

ACG Philadelphia is hosting its 2nd annual Industry Tour focused on SaaS & Tech-Enabled Services on March 12th at the Union League of Philadelphia. Last year's event brought together 200 PE investors, investment bankers, operating companies and industry advisors from around the country.

ACG New York's Women of Leadership is hosting a golf event and reception on March 21 at Konnect Golf in Manhattan. The event brings together female dealmakers from private equity firms, investment banks and lenders.

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