With the proliferation of business news on the Internet these days, it’s not difficult to keep up with the transactions that shape Canada’s capital markets. Yet the men and women behind the scenes who shape the deals are often invisible to all but their direct colleagues. Lexpert, Deloitte, The Globe and Mail and Thomson Reuters founded the Canadian Dealmakers program in 2007 in order to change that.
Here’s how the program works. A committee of preeminent business leaders evaluates the candidate deals according to Award criteria. The panelists are pulled from the top ranks of the business world and, this year, include a Director of TMX Group and the Dean Emeritus of the Harvard Business School. Together the panel looks for hallmarks of excellence, which can be a deal steered through incredible complexities, a transaction that promotes growth and innovation, one that creates value for stakeholders or brings best practices to a new level.
The selected winners are then recognized at the annual Canadian Dealmakers gala dinner. The net proceeds from this year’s event, held on March 10th at Toronto’s Fairmont Royal York Hotel, will go to Junior Achievement of Canada.
Here are the Canadian Dealmakers Award winners for 2015.
Information Technology Industry Award
DH Corporation acquires Fundtech Ltd. for US$1.25 billion
With business increasingly going global, financial services are as well. When Toronto-based financial-technology provider DH Corporation acquired Fundtech Ltd. for US$1.25-billion in cash, it was with both eyes squarely on expanding its suite of offerings for global financial institutions and large US banks.
Fundtech, which was privately held, has a wide line of transaction-banking software specifically designed for global and domestic payments as well as for financial messaging, corporate cash management and merchant services. Its roughly 1,200 clients include global money-centre banks and mid-sized banks as well as credit unions, non-bank financial institutions and even central banks and corporations.
It has 19 offices globally, including centres in the US, UK, India, Israel and Switzerland. DH Corporation (formerly Davis + Henderson Corp.) pegs the estimated annual IT spend of banks that operate in Fundtech’s existing markets at US$5‒US$6 billion.
DH Chief Executive Officer Gerrard Schmid said, in announcing the acquisition, that it puts the Canadian company “at the forefront of these trends globally, providing us with a market-leading software platform with established scale in mission-critical payment technology.”
Post-acquisition, DH will service eight of the top 10 and 32 of the world’s top 50 banks along with about 190 of the top 300 US banks. DH says synergies from the purchase are expected to be accretive within the first year.
Legal Advisors
Advisor to DH: Stikeman Elliott LLP, Winston & Strawn LLP
Shopify Inc.’s initial public offering
Shopify Inc.’s initial public offering was the first new technology listing to debut in Toronto in nearly a year and investors loved the story, opening their wallets for gross proceeds of US$150.5 million. Demand was so great, the Class A subordinated voting shares were reportedly over 30 times oversubscribed. The company had originally planned to issue 7.7 million shares priced between $12 and $14; it ended up issuing 8.5 million shares at $17 each.
Shopify is a cloud-based commerce platform that allows people and businesses to create online stores. Its software helps to design, set up and manage stores on the web, on mobile devices and social media, as well as brick-and-mortar locations and pop-up shops — providing merchants with a single view of their business across platforms.
With more than 900 applications, the Ottawa-based company also provides users with the tools to manage all aspects of their shops, from uploading products and customizing the design to accepting credit cards, and viewing incoming orders as well as completed transactions.
More than 165,000 stores use Shopify, with the list of company clients including retailers such as Angry Birds, General Electric, Foo Fighters and Epic Meal Time. The stock is listed on the New York and Toronto stock exchanges. The IPO price valued the company at $1.27 billion.
Legal Advisors
Advisor to Shopify: Stikeman Elliott LLP, Skadden, Arps, Slate, Meagher & Flom LLP
Advisor to Underwriters: Blake, Cassels & Graydon LLP, Paul, Weiss, Rifkind, Wharton & Garrison LLP
Element Financial Corp. acquires GE Capital fleet management business for $8.6 billion
Toronto-based Element Financial Corp. instantly became North America’s leading fleet management and services enterprise with the $8.6-billion friendly purchase of GE Capital’s remaining North American fleet management operations in the US and Mexico, as well as operations in Australia and New Zealand.
Steven Hudson, Element’s company’s Chief Executive Officer, called the latest $8.6-billion all-cash purchase “a game-changer,” saying it brings together the systems, technologies, products and people “that have helped to define excellence in the fleet management industry in North America for more than five decades.”
“Because of our scale, we are the big barking dog in the North American sector,” Hudson said on a call.
Element already acquired the Canadian operations of GE Capital’s North American fleet management business for $570 million in 2013.
The former GE business covers the full range of corporate-fleet requirements, from ordering and financing vehicles to providing analytics and location systems, that allow companies to keep track of their vehicles in real time. It counts major companies such as DuPont, Comcast Corp. and Tim Hortons Inc. among its customers.
The deal was expected to boost Element’s annual earnings per share by 20 per cent based on fully annualized synergies in the range of US$90 million‒US$95 million, the company said, adding it sees the Australian and New Zealand portion of the deal as an excellent fit with its established North American operations.
Legal Advisors
Advisor to Element Financial: Blake, Cassels & Graydon LLP, Cravath, Swaine & Moore LLP, Herbert Smith Freehills LLP, White & Case LLP
Advisor to GE: Weil, Gotshal & Manges LLP, Creel, García-Cuéllar, Aiza y Enriquez, S.C., King & Wood Mallesons
Advisor to Underwriting syndicate on related financing: Osler, Hoskin & Harcourt LLP
Advisor to Lenders on syndicated credit facility for Element: Dentons Canada LLP
SunOpta Inc. acquires Sunrise Holdings (Delaware), Inc. for $444 million plus purchase price adjustments
Mississauga, Ont.-based SunOpta Inc. acquired Sunrise Holdings Inc. from an investor group led by affiliates of Paine & Partners LLC to boost all three of the Canadian company’s strategic core segments: healthy fruit, healthy beverages and healthy snacks.
SunOpta is a global leader in organic, non-genetically modified and specialty foods, and it sells a range of products from non-genetically modified soybeans to Nature’s Finest orange juice. The company said the acquisition complements its existing frozen-fruit and fruit-processing operations and is expected to create significant operational efficiencies.
California-based Sunrise is the leading processor of conventional and organic individually quick frozen fruit in the United States, offering a range of products in a variety of packaging formats to both retail private label and food-service customers. With facilities in California, Kansas and Mexico, it has about $300 million in annual sales.
Rik Jacobs, SunOpta’s President and Chief Executive Officer, called the deal “transformative,” saying it makes SunOpta the US market leader in conventional non-GMO and organic individually frozen fruit.
The acquisition was for $444 million plus purchase price adjustments. SunOpta financed the purchase through proceeds of an offering of $100 million in common shares, a $330-million second lien loan and borrowing under its existing North American credit facilities.
Legal Advisors
Advisor to SunOpta: Faegre Baker Daniels LLP, Simpson Thacher & Bartlett LLP
Advisor to Affiliates of Paine & Partners LLC: Wachtell, Lipton, Rosen & Katz
Consumer Business Industry Award
Hudson’s Bay Co. buys Galeria Holding for $3.9 billion
When Hudson’s Bay Co. entered into an agreement with METRO AG to buy Galeria Holding – the parent of Germany’s leading department store Galeria Kaufhof and Galeria INNO, Belgium’s only department store – it was the storied Canadian retailer’s first foray onto European soil.
Kaufhof is Germany’s top department store by market share, with 103 Galeria Kaufhof locations and 16 Sportarena stores. The company also operates 16 Galeria INNO locations across Belgium.
HBC had reportedly been bidding for the 135-year-old German company for months. Austria’s SIGNA Holding, which owns Kaufhof’s main competitor, was also very interested in the properties, which include 59 properties in prime German inner-city locations.
When it announced the deal, HBC also announced HBS Global Properties, its real-estate joint venture with Simon Property Group, was acquiring 41 Galeria properties in a transaction valued at $3.9 billion.
When Kaufhof is combined with HBC’s current portfolio, which includes Hudson’s Bay, Lord & Taylor, Saks Fifth Avenue, Saks OFF 5TH and Home Outfitters, HBC said it will operate 464 stores with approximately 44 per cent of its sales generated in United States, 31 per cent in Germany, 23 per cent in Canada and 2 per cent in Belgium.
The acquisition has an enterprise value of $3.9 billion, including pension liabilities.
Legal Advisors
Advisor to HBC: Stikeman Elliott LLP, Willkie Farr & Gallagher LLP
Advisor to LBBW: Hengeler Mueller
Advisor to Term Lender: Cahill Gordon & Reindel LLP
Advisor to Metro (Vendor) Financial Advisor: Clifford Chance LLP
Magna International Inc.
Magna International Inc. told investors in January it expects total sales to rise in the area of 10 per cent this year, helped by recent acquisitions including that of German transmission parts-maker GETRAG. Not every deal made quite as big a splash in the headlines, but there’s no question the company’s deal team was kept hopping in 2015.
GETRAG provides the Canadian auto-parts giant with boots on the ground in China, with joint-venture relationships with Jiangling Motors Corp. and Dongfeng Motor Group Co. through a partnership with Ford Motor Co. in Europe.
GETRAG – an 80-year-old family-owned company – is the world’s ninth-largest producer of transmissions by volume, manufacturing 3.9-million units annually. It has 13 manufacturing and 10 engineering centres across Europe, Asia and North America, with four of the manufacturing centres located in China.
China represented about 10 per cent of GETRAG’s revenues in 2014, and that amount was expected to grow to about 50 per cent by 2019.
The GETRAG purchase was seen as part of Magna’s decision to focus on strategic parts. Transmissions are critical to cutting fuel consumption and emissions, which has become increasingly important as governments around the world impose environmental controls. GETRAG and Magna had been in talks off and on for several years.
Among other transactions, in February Magna sold its Austrian-based Magna Steyr’s battery pack business to South Korea’s Samsung SDI Co. The division makes rechargeable batteries for German automaker BMW’s i3 electric cars.
In July – around the same time as the giant GETRAG purchase – Magna sold Magna Interiors to Spanish car part-maker Grupo Antolin for roughly US$525 million, as part of a narrowing of its product offerings.
In October, the Canadian company announced it was acquiring Stadco Automotive Ltd., a UK-based company that supplies stamped bodies for automakers such as Jaguar Land Rover, Ford Motor Co. and General Motors. Stadco employs 1,400 people at four plants in the United Kingdom and one in Germany.
The deal team isn’t likely to see a slower pace in 2016, with Magna Chief Financial Officer Vince Galifi telling investors at the start of the year the company expects to continue to pursue M&A opportunities.
Legal Advisors
Advisor to Magna: Osler, Hoskin & Harcourt LLP, Hengeler Mueller, Sidley Austin LLP, Allen & Overy
Foreign Outbound (Global) Award
Linamar Corp. acquires Montupet S.A. for US$975 million
When Canada’s Linamar Corp. submitted a US$975-million friendly bid for France’s Montupet S.A., it was a big step in realizing its strategy of becoming a world leader in the manufacture of aluminum components for the auto sector.
Montupet, based in Clichy in the outskirts of Paris, is an expert in the design and casting of aluminum cylinder heads while Linamar is an expert in machining them, having produced seven million units in 2014. Having teams from the two companies working collaboratively will help drive the development of better product designs aimed at cutting weight, improving fuel efficiency and lowering emissions in new vehicles, Linamar says.
The deal came about at a time Montupet’s management, which owned around 37 per cent of the French company, was reported to be looking for a tie-up with an existing industry player as a way to expand into China. Linamar, based in Guelph, Ont., has sales and production facilities in North America and Europe as well as in Asia, including manufacturing plants in China.
Analysts said the tie-up with Montupet will help Linamar compete with larger rivals such as Germany’s ZF Friedrichshafen AG, which became the world’s second-largest automotive supplier by sales when it took over TRW Automotive Holdings Corp. in 2014. Linamar boosted its own international footprint around the same time with a majority stake in Germany’s auto-parts supplier Seissenschmidt AG.
Legal Advisors
Advisor to Linamar: Linklaters LLP, Blake, Cassels & Graydon LLP
Advisor to Montupet: Jeantet
Media & Telecommunication Industry Award
Rogers Communications Inc. acquires Mobilicity for $440 million
Mobilicity, a small Ontario-based wireless carrier, had one valuable asset when it put itself under court protection in 2013: the spectrum it purchased at auction in 2008. The airwaves, used to build cellular networks, attracted the attention of Rogers Communications Inc. and Telus Corp., Canada’s No. 1 and 2 wireless providers.
Telus twice tried to purchase the cash-strapped carrier only to be blocked by the federal government, which said the proposed deal would have consolidated too much wireless infrastructure in the hands of too few players.
When Rogers, Canada’s largest mobile operator, announced the acquisition in June, it said Industry Canada and the court-appointed monitor overseeing Mobilicity’s restructuring had both already approved the deal. The difference? Rogers agreed to sell some of Mobilicity’s spectrum to other smaller rivals in a complex arrangement designed to address regulators’ concerns about concentration of ownership lessening competition.
It swapped Mobilicity’s AWS-1 spectrum in southern Ontario with Wind Mobile for some of Wind’s spectrum. Rogers also said it was executing an option to buy airwaves from Calgary-based Shaw Communications Inc., keeping some in key markets but selling the remainder to Wind. All told, Rogers transferred 16 spectrum licences from Shaw and 10 licences from Mobilicity to Wind.
Rogers said the acquisition means faster speeds and better quality for its customers as Canadians everywhere are increasingly using mobile video.
Legal Advisors
Advisor to Rogers: McMillan LLP, Stikeman Elliott LLP
Advisor to Data & Audio-Visual Enterprises Wireless: Norton Rose Fulbright Canada LLP
Advisor to the Ad Hoc Committee of Mobilicity Noteholders: Goodmans LLP
Advisor to Ernst & Young: Thornton Grout Finnigan LLP
Advisor to Catalyst Capital Group: Fasken Martineau DuMoulin LLP
New Flyer Industries Inc. acquires Motor Coach Industries International Inc. for $455 million
This transaction was all about diversifying an already strong business. New Flyer Industries Inc.’s $455-million purchase of Motor Coach Industries International Inc. merged North America’s largest highway coach manufacturer and the largest urban bus maker. The combined company is the number-one heavy-duty bus brand and the number-one motor-coach brand in North America with more than 70,000 of its vehicles on North American roads.
Winnipeg-based New Flyer, founded in 1930, manufactures and sells city transit buses, such as rapid transit vehicles and electric trolleys, and provides aftermarket parts and support. Its principal customers are local transit authorities.
Motor Coach Industries, which itself dates back to 1933, dominates on the highway, designing and selling luxury passenger coaches, hybrid and regular commuter coaches, university transportation coaches and even inmate-security transportation vehicles. Based in Des Plaines, Illinois, the company has facilities in Winnipeg and Montréal as well as in Pembina, North Dakota and Louisville, Kentucky.
New Flyer expected the deal to save about $10 million a year in operational savings through the rationalization of corporate costs and wider application of its lean manufacturing programs.
The deal close was subject to the Hart–Scott–Rodino Antitrust Improvements Act, the Sherman Antitrust Act of 1890, the Clayton Antitrust Act of 1914, the Federal Trade Commission Act of 1914 and the Competition Act, among others.
Legal Advisors
Advisor to New Flyer: Torys LLP
Advisor to KPS Capital Partners, L.P.: Goodmans LLP, Paul, Weiss, Rifkind, Wharton & Garrison LLP
Advisor to The Bank of Nova Scotia and Bank of Montreal: Borden Ladner Gervais LLP
Advisor to The Bank of Nova Scotia: Chapman and Cutler LLP
2015 Canadian Bank of the Year (by Deal Volume) Award
Royal Bank of Canada
The RBC Capital Markets deal teams guided 34 transactions through closing last year, the most by any Canadian bank. The collective value of the deals was US$31.3 billion, including net debt.
RBC was on the blockbuster of the year, advising Enbridge Inc. on the transfer of US$24.8-billion of Canadian liquids pipeline and renewable energy assets to subsidiary Enbridge Income Fund Holdings Inc.
The bank advised Toronto-based gold miner Romarco Minerals Inc. in the company sale for US$522 million to Australian-Canadian miner OceanaGold Corp. They were again on the team for the target when Norbord Inc. acquired the entire share capital of Ainsworth Lumber Co. Ltd., a Vancouver-based lumber manufacturer and wholesaler, from Brookfield Special Situations Management Ltd., a unit of Brookfield Asset Management Inc. The stock swap reverse take-over was valued at US$882 million.
RBC advised Sun Life Financial Inc. in its US$454.5 million purchase of Bentall Kennedy LP, a Toronto-based provider of real estate advisory and investment management services, from British Columbia Investment Management Corp. and the California Public Employees’ Retirement System. They also helped counsel an investor’s group of Veresen Inc. and Kohlberg Kravis Roberts & Co. LP, which formed a new entity named Veresen Midstream LP, in the US$515.9-million acquisition of natural gas gathering and compression assets from Encana Corp.
All told, RBC advised the target in 24 of 34 transactions.
2015 Canadian Bank of the Year (by Deal Value) Award
Bank of Montreal
The deal team at BMO Capital Markets worked on 27 deals last year with a collective value (including net debt) of $36 billion. That was enough to capture 39.5 per cent of the Canadian deal market share and earn the bank the top spot for financial advisors by deal value.
The $24.7-billion transfer of the Canadian liquids pipelines business held by Enbridge Pipelines Inc. and Enbridge Pipelines Athabasca Inc., along with some Canadian renewable energy assets to Enbridge Inc., pushed the BMO team across the finish line in the value category. But among its other transactions, BMO advised Ontario Teachers’ Pension Plan on the $2.6-billion acquisition of Heritage Royalty Limited Partnership, a former subsidiary of Cenovus Energy Inc. They were on the team for Shred-It International Inc. in the $2.3-billion sale to Stericycle Inc., the medical-waste management company. They advised Crescent Point Energy Corp. in the $1.2-billion acquisition of Legacy Oil + Gas Inc. — one of the first major acquisitions in the Canadian oil patch since the collapse in oil prices.
BMO Capital Markets was the advisor of choice for the acquirer on 17 of its 27 deals last year, counselling familiar companies such as Torstar Corp., Crescent Point Energy Corp. and Tahoe Resources Inc. on getting their deals done.
Gildan Activewear Inc.
Gildan Activewear Inc. lends new meaning into the term active with a series of deals over the past four years that have sent the company’s share price on a tear.
Among its transactions, Gildan spent US$88 million in 2012 to acquire Anvil Holdings, a company that supplies high-value organic, recycled and sustainable shirts. It followed that up by buying the remaining 50 per cent stake in CanAm Yarns, a partnership established in 2003 to supply it with yarn for use in knitted apparel.
In early 2013, Gildan bought the North Carolina manufacturing facility in Salisbury from PGT for US$8 million and the assets of New Buffalo Shirt Factory Inc. for approximately US$7 million. In 2014, the Montréal-based company acquired the assets of Doris Inc., North America’s third-largest branded ladies legwear marketer, for US$11 million.
It rounded out the spate of acquisitions with last year’s US$100 million purchase of Comfort Colors, a leading North American supplier of dyed T-shirts and sweatshirts.
The deals were not all individual blockbusters but the collective impact on the company’s stock price has been exactly that. A share that traded for $9.58 (adjusted for a 2:1 split) on the Toronto Stock Exchange Dec. 31, 2011, was worth $39.34 on Dec. 31, 2015 for an increase of 311 per cent.
Legal Advisors
Advisor to Gildan Activewear: Norton Rose Fulbright Canada LLP, Sullivan & Cromwell LLP
Mid Market Deal of the Year Award
Clearwater Seafoods purchases Macduff Shellfish Group for $195-million
Nova Scotia-based Clearwater Seafoods was committed to investing in expanding its menu of premium wild and sustainably harvested seafood when it reached a deal to buy Macduff Shellfish Group for £94.4 million, or roughly $195-million.
Macduff, an integrated seafood company, is the UK’s largest producer of wild shellfish with Europe’s largest scallop fishing fleet at 14 vessels and production plants in Mintlaw and Stornoway, Scotland.
It’s a transformational acquisition that boosts Clearwater’s scale and provides the Canadian company broader access to retailers in international markets especially in the UK, Italy, Spain, and Portugal. Clearwater – which also harvests, processes and distributes seafood products worldwide – says the acquisition will expand its supply of wild seafood by 20 per cent, giving it access to over 6.7 million kilograms of shellfish including scallops, langoustine, whelk and crab in the key European market
Under the terms of the friendly deal, Macduff will retain its name and operate as a wholly-owned subsidiary of Clearwater with the two businesses sharing resources and best practices. The purchase price includes a $134-million cash payment and the assumption of about $8 million in seasonal working-capital debt as well as unsecured deferred consideration to be paid over the next five or six years.
Legal Advisors
Advisor to Clearwater Seafoods: Pinsent Masons LLP, Goodmans LLP, Andrew Jackson Solicitors, Loyens & Loeff N.V., McInnes Cooper
Advisor to MacDuff Shellfish: Burness Paull LLP, Anderson Anderson & Brown LLP
Advisor to GE Canada and BMO Capital Markets: Blake, Cassels & Graydon LLP
Advisor to GE Canada: CMS Cameron McKenna LLP
Zayo Group Holdings Inc. acquires MTS Allstream Holdings Inc. for $465 million
By the time Zayo Group Holdings Inc., a Colorado-based telecommunications infrastructure owner, announced it would be buying Manitoba Telecom Services Inc.’s Allstream Holdings Inc. for $465 million in November, most of the groundwork had been laid.
Two years ago the federal government blocked a previous attempt to sell Allstream to an investment firm co-founded by Egyptian billionaire Naguib Sawiris on national security grounds. MTS – which has 9,000-plus kilometres of fibre network in Toronto, Montréal, Vancouver, Ottawa and Calgary – also runs telecommunications networks for many of Canada’s government agencies.
MTS was still determined to sell Allstream and resolved not to have the same thing happen again. This time, as the parent was engaged in talks with six strategic bidders, executives also spent time in Ottawa making sure they understood “the complete needs and expectations” of the relevant regulators.
MTS Chief Executive Officer Jay Forbes said the Canadian company decided on Zayo because the bid not only represented full value for this asset but also “gives us a reasonable degree of certainty in terms of closure.” The strategy paid off. In January, the companies announced that, given the satisfaction of certain conditions to closing as set out in the share purchase agreement, the transaction was expected to close “expeditiously.” Zayo has a 140,000-kilometre fibre network in the US and Europe.
Legal Advisors
Advisor to Zayo: Borden Ladner Gervais LLP, Gibson, Dunn & Crutcher LLP, Morgan, Lewis & Bockius LLP
Advisor to Manitoba Telecom Services: Stikeman Elliott LLP, Wilkinson Barker Knauer, LLP
Legal advisors listed are based on information provided by the winning companies at press time.