M&A wrap: VMG, Hillhouse, Little Freddie, Hellman & Friedman, MKS Instruments

VMG Partners and Hillhouse Capital have invested in European organic baby food maker Little Freddie. The target makes cereals, pouches and snacks and states that its "mission is to make it easier for parents to access organic and nutritious baby food options for their children." Little Freddie was founded in 2014 by husband and wife team Piers Buck and Taslim Ho. According to the company, Piers personally visits farms to check on the ingredients that go into Little Freddie products. “Little Freddie is a high-quality, trusted brand, that has tremendous potential in Asia and other parts of the world as parents have become increasingly savvy about what they feed their children,” says Hillhouse Capital partner Cao Wei. “We strongly believe that brands able to identify and meet unique and unmet consumer needs will excel in the new and rapidly changing retail landscape.” The deal is part of a strategic partnership between Hillhouse and VMG where they will co-invest in consumer brands. The two firms have allocated up to $100 towards investments in the sector. Consumers are opting for healthier food products and that is driving M&A activity. The Hershey Co. (NYSE: HSY) bought Pirate Brands for $420 million and ThinkThin snack maker Glanbia plc is buying the iconic SlimFast meal-replacement brand from Kainos Capital for $350 million.

Hellman & Friedman has raised $16 billion for its ninth fund, according to an SEC filing. The fund is the second largest buyout fund raised in 2018, behind the Carlyle Group LP's (Nasdaq: CG) $18.5 billion fund. H&F focuses on the energy, healthcare and retail sectors.

Deal news
MKS Instruments Inc. (Nasdaq: MKSI) is buying Electro Scientific Industries Inc. (Nasdaq: ESIO), a maker of laser-based manufacturing products for the micro-machining industry, for $1 billion. Lazard, Barclays and WilmerHale are advising MKS. Stifel and Wilson Sonsini Goodrich & Rosati are advising ESI.

Arsenal Capital-backed CPS Performance Materials has acquired chemicals producer Far Chemical from Edgewater Capital Partners. Seaport Global Securities LLC advised Egdewater. Balmoral Advisors advised Arsenal and CPS.

Sheridan Capital has invested in physical therapy practice Empower Physical Therapy. McGuireWoods LLP represented Sheridan. Oxford Finance provided financing.

Pharos Capital has bought a majority stake in Charter Health Care Group, a post-acute healthcare services company.

Calera Capital has acquired a majority stake in ImageFirst, a provider of laundry services for the healthcare industry.

CVC Capital Partners and GRO Capital have purchased a majority stake in Omada, a government identity access and software company.

Ipsos has acquired Synthesio, a provider of social media data and insights.

Featured content
The Oakland Raiders take on the San Francisco 49ers Thursday night in NFL Week 9. Off the field, New England Patriots quarterback Tom Brady recently teamed with former Giants defensive end Michael Strahan, who is the co-host of ABC’s Good Morning America, to launch a sports media startup called Religion of Sports Media, which has raised $3 million in venture capital funding from CourtsideVC and Advancit Capital. Many NFL players invest in companies. Muhsin Muhammad, who played wide receiver for the Carolina Panthers and the Chicago Bears, is a managing director of private equity firm Axum Capital Partners. Steve Young, former San Francisco 49ers quarterback, is a co-founder of private equity firm HGGC. Mergers & Acquisitions takes a look at star players who invest in companies through private equity, venture capital and other investment vehicles.

Mergers & Acquisitions identifies 15 cities as fertile communities for dealmaking. We look at metropolitan areas from Austin (where Michael Dell launched a PC business out of his dorm room back in the day and where thousands gather every year for SXSW) to St. Louis(home of private equity firm Thompson Street Capital Partners). Be sure to check out Milwaukee (with private equity firm Robert W. Baird & Co. and investment bank Clearly Gull) and Minneapolis (home of strategic buyers 3M, Best Buy, General Mills, Hormel and Target). And don’t forget Boston, Chicago, New York, San Francisco and Los Angeles and more. See our list, Dealmaker's guide to 15 cities where M&A thrives.

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.

Canada legalized recreational marijuana on Oct. 17, marking the first G7 nation and the second country in the world to enact full legalization. To investors in the still developing cannabis industry, many believe the market is just now approaching its own inflection point, as it transitions from a black to gray market, characterized by a more attractive risk profile and outsized growth potential. The sticking point is that as a Schedule I drug illegal under federal law, cannabis still presents imposing obstacles for traditional investors, ranging from capital markets that remain inaccessible to uncertainty over bankruptcy proceedings. Yet, ironically, it’s these very same obstacles that make the opportunity so appealing to investors willing to operate in an indefinite gray area to create an ecosystem for a market expected to reach $75 billion in size by 2030. Salveo Capital managing partner Jeffrey Howard shares advice about investing in cannabis in a guest article. Read the full story: How to seize M&A opportunities in marijuana’s gray market.

Events
ACG Chicago's Family Office Conference, held Nov. 8, at the Westin Chicago River North, brings deamakers together for a "deep dive" into family offices. The event features a keynote by Laurent Roux, Gallatin Wealth Management, and panels, including: Current State of Family Office Direct & Co-Investment Activity, with Gary Levenstein, Nixon Peabody; and Impact of Millennial Generation on Family Office Investment Strategy including Social Impact Investing, with Adam Lieb and Tony Oommen, Fidelity Family Office Services.

ACG Florida Capital Connection, held Nov. 12-14, at the Vinoy Renaissance St. Petersburg Resort & Golf Club, puts “sun and fun” into dealmaking for the middle market, bringing together hundreds of dealmakers. The keynote speaker is Forbes Media CEO Steve Forbes, and the featured speaker for the Women’s Forum is Valerie Crites Fowler, who served as a diplomat in the U.S. Foreign Service for over 29 years, reaching the rank of Minister Counselor in the Senior Foreign Service.

Middle Market Week, hosted by ACG New York and held Nov. 26-30 at various locations throughout New York, brings together leading global middle-market dealmaking professionals to develop and enhance their dealmaking activities, strengthen their long-term relationships, and provide numerous opportunities for networking all week long. Mark your calendar for the Private Equity Annual Wine Tasting Gala on Nov. 28 at Gotham Hall. The building was constructed in the 1920s as the headquarters of the Greenwich Savings Bank. The gala brings together the leading middle market private equity firms for an evening of fine wines and networking.