Carpenter Corporation acquires Engineered Foam business of Recticel

Facts

Involved firms and advisors buy side:
Structuring and negotiation of the transaction: Stibbe 
Competition aspects and remedial actions: Stibbe, McGuireWoods LLP (US, UK and PRC)
Due diligence: Stibbe (BE & NL), McGuireWoods LLP (US, UK and PRC), Chiomenti (Italy), Cuatracas (Spain), Phoenix (India), Bodenheimer (Germany), BHM Avocats (France)  
Financial due diligence and integration preparation: KPMG (US and Belgium) 
Transaction services and Corporate finance advisor to the buyer: Ducera (New York)
Involved firms and advisors target: Allen & Overy, Eight Advisory, J.P. Morgan
Involved firms and advisors sell side: Allen & Overy; Eight Advisory, J.P. Morgan 

Brief description / Deal outline:
Carpenter Corporation, a US privately held company active in the foam business, developed and implemented a “white knight” strategy whereby Recticel implemented a poison pill in the course of hostile public take-over bid by Greiner on the shares of Euronext Brussels’ listed Recticel, by ultimately agreeing to acquire the main historical activities of Recticel, i.e. the engineered foam business.

The completion of the transaction requires the obtaining of clearance by the competition authorities in various jurisdictions, including the United Kingdom, and thus remedial divestments, as well as the split and carve-out of Recticel’s activities in two groups, i.e. the insulation business, and the engineered foams business.

Why should this deal win the Award for Best Large Cap Corporate Deal?

Motivation 1

The overall context of the transaction is very relevant to assess the transaction:

• On 14 May 2021, Greiner, a global supplier of plastics and foam solutions, agreed to acquire a 27% stake in Recticel from its largest shareholder Compagnie Bois Sauvage.
• On the same day, Greiner also announced its intention to launch a voluntary conditional takeover offer on Recticel.

We believe the transaction should be nominated for a myriad of reasons:

1) Transaction was important component in the overall defence strategy for Recticel: the sale of the Engineered Foams division to Carpenter – which was announced on 11 October 2021 – marks the culmination of the defence strategy against Greiner’s unsolicited public takeover approach initiated by Greiner in May 2021. By selling its Engineered Foams division (one of its 3 divisions besides Insulation and Bedding) to Carpenter, Recticel successfully defended itself against the unsolicited takeover of Greiner. In February 2022, Greiner announced that it agreed to sell its stake in Recticel to Baltisse.

2) Value creation for Seller: this transaction (together with the eventual sale of the bedding division to Aquinos for € 122 million, as announced on 18 November 2021) was executed by Recticel, demonstrating superior value creation vs the unsolicited offer of Greiner. The share price of Recticel increased to ca. € 17.50 by year end 2021 and increased further in early 2022, reaching € 22 in April 2022, well above the € 13.50 takeover offer price of Greiner.

3) Value creation for Acquirer: for US-based Carpenter, the acquisition will strengthen their position in the technical foam markets in North America and in Europe through a more diverse and complementary product offering, while establishing a presence in Asia Pacific. It would also accelerate the expansion of the acquirer’s offerings into new markets.

4) Strategic reorientation for Recticel: the sale of the Engineered Foam division (together with the sale of the bedding division, which Recticel intended to divest as per its announcement in February 2021) fitted into a strategic re-orientation of the Group to focus exclusively on its Insulation Business, presenting excellent growth and profitability prospects going forward.

In addition, many factors contributed to the uniqueness and overall complexity of the transaction:

5) Transaction had to be approved by a Special Shareholders Meeting: given the transaction took place while Recticel was under takeover offer, it had to be approved by a Special Shareholders Meeting. A strong mobilisation of both institutional and retail shareholders lead to close to 74% of the outstanding shares being present or represented on the Special Shareholder meeting which was held on 6 December 2021. Of the votes casted, 63.5% were in favour of the sale of the Engineered Foams business to Carpenter. It should be noted that 27% of the shares were held by Compagnie Bois Sauvage.

6) Carve-out: the sale of the Engineered Foam division implied a carve-out of the business increasing the overall complexity of the transaction

7) Cross-border transaction: sale to US strategic buyer.

8) Parallel executions: the management and advisors of Recticel had to execute (in addition to their day-to-day responsibilities in running the company) the overall defence of the company, sale of the Engineered Foams division, sale of the Bedding divisions as well as the carve-out preparations for both assets.

Motivation 2

• Media coverage as the first Belgian poison pill applied in Belgium;
• Significant deal value;
• Complexity of the transaction involving Belgian securities’ and takeover regulations, competition aspects in various jurisdictions, the complex carve-out of the business, and international scope of the activities over more than 10 jurisdictions.

What was the deal rationale?

The deal involved two companies with a longstanding history as leading industrial groups. Recticel was founded in 1778 in Wetteren and for many decades was part of the Société Générale group. The last decades, it has undergone substantial changes in its structure and organisation. Recticel’s Engineered Foams currently consist of 34 manufacturing locations spread over 4 continents (Europe, North Africa, Asia Pacific and the USA), employing around 2,754 people. In 2020, the business line generated total pro-forma sales of € 562 million, excluding the Nordic bedding activities (€ 15 million).

Carpenter Company, founded in 1948, is privately owned and headquartered in Richmond, VA (USA). It is considered one of the largest integrated producers of polyurethane foams with 56 production sites and approx. 4,300 employees worldwide. Carpenter, with 2020 annual sales of around USD 2 billion, Carpenter intends to further develop its flexible foams activities by complementing its existing product offering with technical foams, and expanding its customer base and geographic reach.

The deal with Carpenter provides a strong strategic fit with Recticel Engineered Foams, with a highly complementary industrial footprint and product portfolio. Like Recticel, Carpenter has a clear customer focus and places high importance on R&D. The synergies between the Recticel Engineered Foams business and Carpenter’s foams business will result in one of the world’s largest vertically integrated manufacturer of polyurethane foams and specialty polymer products.

The structuring and implementation of an agreement between the two parties required the reconciliation of the respective goals of both buyer and seller. Prior to the involvement of Carpenter, the majority shareholder of Recticel, i.e. Greiner AG had the option to acquire in aggregate a stake in Recticel of approx. 27% of all shares and issued a voluntary offer on all remaining shares. Recticel considered the public offer of Greiner undervalued the company considerably and did not allow Recticel to further fully develop its own strategy.

Carpenter was not interested to launch a potential counter bid, as it was uncertain whether it would be able to proceed with a delisting, and/or the split and carve-out of the respective businesses of Recticel following a counter-offer, taking into account the stake already held or controlled by Greiner. In order to be able to offer maximum value to Recticel and the shareholders of Recticel and be able to implement the carve-out of the REF business with an approval threshold of 50% votes cast (thus not requiring the blocking stake of Greiner), Carpenter offered Recticel to directly acquire the engineered foams business of Recticel, rather than a counter public offer.

Recticel developed a comprehensive information strategy to inform shareholders of the proposed transaction and held a Special Shareholders Meeting during which the sale of the Engineered Foams business line to the US company Carpenter was proposed.

The completion of the transaction requires a complex carve-out of all historical engineered foams activities in many jurisdictions, and the implementation of appropriate temporary services agreements between the two businesses, while at the same time fully complying with all competition regulations and obtaining the necessary approvals of the competent competition authorities.

Where lies the value creation?

• Value creation for Recticel shareholders (and superior alternative vs € 13.5 offer of Greiner), as evidenced by the share price evolution in the months following the announcement of the transaction (see above).
• Value creation for acquirer through synergy creation as it will strengthen their position in the technical foam markets in North America and in Europe through a more diverse and complementary product offering, while establishing a presence in Asia Pacific.
• Finally, it will also accelerate the expansion of the acquirer’s offerings into new markets.

The synergies between the Recticel Engineered Foams business and Carpenter’s foams business will result in one of the world’s largest vertically integrated manufacturer of polyurethane foams and specialty polymer products.

On the other hand, Recticel will continue as a listed company to focus, foster and grow its insulation business and has maximized the means from the sales of the REF business to further invest and grow the insulation business.

What is the impact of this deal for the stakeholders?

After due consideration of alternatives, the Board of Recticel concluded that the sale of the Foam division to Carpenter would create superior value for shareholders and a better strategic project for all stakeholders by focusing the group on its Insulation Business Segment.

Taking into account the highly compatible footprint of Recticel and Carpenter, Recticel’s Engineered Foams employees and customers will be able to contribute to Carpenter’s global, industrial growth. The complementarity in terms of product range and geographical presence clearly offers a lot of opportunities for end-consumers, retailers and employees. Recticel’s remaining employees will be able to focus on Recticel’s insulation.

What was particular about the deal process?

Particularities and complexities have been summarized above but in essence relate to:
(1) transaction as important part of the overall successful defence mandate

(2) transaction required approval by a Special Shareholders Meeting given company under takeover offer, which required mobilisation of shareholder base

(3) carve-out transaction given sale of a division

(4) management and its advisors executed successfully in parallel the defence, this transaction as well as the sale of the bedding division

(5) cross-border nature of deal.

The structuring, negotiation and approval of the transaction required an in-depth knowledge and creative implementation of both M&A practices, public takeover regulations and obligations of listed companies. Carpenter structured a unique offer to Recticel whereby both parties were able to meet their respective goals (i.e. acquisition of the REF business by Carpenter and counter a hostile public offer of Greiner, implement its strategy to become a strong isolation player, and offering maximum value for the company and thus shareholders by Recticel). The transaction involved the implementation of a poison pill for the first time in Belgian public takeover history.

Do the management or entrepreneurs deserve a special mention?

The management of Recticel did a terrific job by executing the transaction while being under the pressure of an unsolicited public takeover offer. They continued to focus on running the company’s day-to-day operations, while at the same time executing successfully the parallel sale of two out of its three divisions (Engineered Foams, Bedding), as well as preparing the carve-out of both divisions.

Taking into account the complexity and size of the transaction, the negotiation and follow-up of the implementation of the transaction requires the continuous involvement of strong leadership by both CEO’s, legal counsel, COO’s and CFO’s of the respective parties.

Crelan acquires AXA Bank Belgium

Facts

Involved firms and advisors buy side:
Financial: Lazard SPRL
Legal: Eubelius
Involved firms and advisors target:
Financial: BNP Paribas
Legal: Linklaters
HR Legal: Claeys & Engels
Involved firms and advisors sell side:
Financial: BNP Paribas
Legal: Linklaters
HR Legal: Claeys & Engels

Brief description / Deal outline:

On 31 December 2021, AXA S.A. sold 100% of AXA Bank Belgium to CrelanCo. As a result of this acquisition, the Crelan Group has now become the fifth largest retail banking group in Belgium and it has doubled its customers to 1.8 million, who hold over € 45 billion in deposits and over € 45 billion in loans.

Besides the sale of AXA Bank Belgium, this transaction also included an acquisition by AXA Belgium of 100% of Crelan Insurance from Crelan.

In addition, the AXA Group and the Crelan Group entered into a bankinsurance agreement, i.e. a long-term insurance partnership agreement in relation to Property & Casualty and credit-linked insurance extending the existing partnership between AXA Bank Belgium and AXA Belgium to the Crelan Group.

The AXA Group furthermore subscribed to a subordinated Tier 1 debt instrument issued by Crelan for an issue price of € 245 million, and Crelan has purchased for € 90 million the contingent convertible bonds previously issued by AXA Bank Belgium to AXA Group.

The transaction was signed on 24 October 2019 but regulatory and competition approvals pushed the closing of this transaction to the end of December 2021.

Why should this deal win the Award for Best Large Cap Corporate Deal?

Motivation 1

AXA announced on 10 January 2022 that it has completed the sale of its Belgian banking operations, AXA Bank Belgium, to Crelan Bank, for a total consideration of € 691 million, comprised of (i) a net cash consideration of € 611 million, and (ii) the transfer to AXA Belgium of 100% of Crelan Insurance (valued at € 80 million).

In addition, AXA and Crelan have entered into a long-term P&C and Protection insurance distribution partnership which will be effective on January 1, 2022, extending the existing partnership between AXA Bank Belgium and AXA Belgium to the entire Crelan network. In cash terms, AXA S.A. will receive € 691 million for the sale of AXA Bank Belgium and AXA Belgium will pay Crelan € 80 million for the purchase of Crelan Insurance.

The completion of this transaction marks another step in AXA’s simplification journey. The group maintains strong links with AXA Bank Belgium through this long-term partnership and to further extend it to Crelan’s network.

Crelan’s acquisition of Axa Bank Belgium is a positive development for the Belgian economy as it creates a powerful alternative to the four large banks; the bank is also fully anchored in Belgium with 100% cooperative shareholders.

The M&A deal thus comprehended 3 processes/agreements. In addition to the acquisition of Crelan acquiring Axa’s Belgian banking activities, Crelan Insurance was transferred to Axa Belgium and Axa and Crelan entered into a long-term P&C and Protection insurance distribution partnership.

A complex regulatory approval process was successfully completed. Given that the “new” Crelan / MergeCo is to be supervised by the ECB as well (in addition to the NBB), a comprehensive dossier (+100 pages) had to be compiled and presented to the ECB. Following many iterations and Q&A sessions, the ECB greenlighted the transaction. This was a landmark undertaking as it was the first time in Belgium and one of the first times in the Eurozone that a nationally regulated bank acquired an ECB regulated bank. Due to this very complex regulatory approval process, the total lasted 3+ years with 2+ years between signing and closing.

In addition to the financial part, a large amount of energy was spent as well on operations. A new IT migration & integration plan was created, the combined agency network rationalized and a detailed synergy analysis was developed. The fact that the whole integration and migration process is estimated to take approximately 27 months shows the complex nature of this deal.

Motivation 2

The AXA Bank Belgium acquisition is a landmark deal in the Belgian banking landscape. Until recently, Crelan was a less significant financial institution in terms of size, yet they were able to acquire a larger bank under the supervision of the European Central Bank. This is a first for Belgium and also rare at European level. The acquisition makes Crelan Group the fifth largest financial banking group among Belgian retail banks and turns the banking group into a significant financial institution that will therefore be directly monitored by the ECB. This deal reshapes the Belgian banking landscape and directly affects around 1,8 million customers, almost 5,000 employees (of which around 1,800 staff and 3,100 employees within the independent agent network), and over 800 branches, all located in Belgium.

What was the deal rationale?

The way people do banking is changing rapidly. The digital revolution and consumer expectations in this regard are evolving at a rapid pace. Adapting the offer and the service to this requires continuous attention and investments.

With low market interest rates that have persisted for years (until very recently) banks have had rather limited margins to achieve returns. Crelan and AXA Bank Belgium have always achieved excellent results thanks to a carefully thought-out policy. Arguably, when considered individually, the banks were a bit too small. Joining forces enables the banks to create scale.

The Crelan Group has become the fifth largest banking group among Belgian retail banks in terms of balance sheet total. Henceforth, the Crelan Group will be investing for twice as many customers, thus enabling them to respond faster and better to customers’ expectations.

The deal was also an important step of the AXA Group’s concentration and simplification objectives as part of its Ambition 2020 strategy.

The group maintains strong links with AXA Bank Belgium through this long-term partnership and to further extend it to Crelan’s network.

Where lies the value creation?

Following this transaction, the AXA Group and Crelan Group can dedicate themselves to their individual specialities: insurance and banking respectively.

Crelan and AXA Bank Belgium will strongly benefit from their consolidation, leveraging on their respective scales and product offerings.  Specifically, the Crelan Group has now become the fifth largest banking group among Belgian retail banks in terms of balance sheet total. This growth will enable Crelan to respond faster and better to customers’ expectations, including with respect to the ongoing digital revolution in the banking space.

The transaction allowed the AXA Group to concentrate on businesses with critical scale and to continue to simplify their business profile. With the transfer of Crelan’s insurance business to AXA, its leadership position in its preferred segments in Belgium will be further reinforced. Furthermore, the transaction further strengthened AXA’s s balance sheet, with +4 points on AXA Group’s Solvency II ratio.

What is the impact of this deal for the stakeholders?

Axa Group

AXA S.A. is the holding company of AXA Group, a worldwide leader in insurance, with total assets of € 775 billion for the year ended 31 December 2021. Present in 50 countries, AXA’s 149,000 employees and distributors are committed to serving their 95 million clients.

The deal was an important step in the execution of the AXA Group’s Ambition 2020 strategy, as it allowed AXA to concentrate on its businesses with critical scale (mentioned below) and to continue to simplify its business profile.

Following the completion of this deal, AXA currently has four main operating activities: Property & Casualty, Life & Savings, Health, and Asset Management. In addition, various holding companies within the AXA Group conduct certain non-operating activities.
AXA operates primarily in five hubs: France, Europe, Asia, AXA XL and International (including Middle East, Latin America and Africa).

Crelan Group

For Crelan Group, the deal marks the beginning of a new chapter in its rich and long history. It does not entail growth for growth’s sake, but rather a well-considered step to the benefit of Crelan and AXA Bank and their customers.

CrelanCo CV is the sole and 100% shareholder of the Crelan Group. The authorised capital of this recognised cooperative society is formed by the participation of over 274,000 cooperative shareholders. The latter are thus all part-owners of the banking group.

Crelan’s cooperative roots date back to the 1960s and have their origins in the bank’s strong ties with the Belgian agriculture and horticulture sectors. The first cooperative societies collected the savings of farmers, which in turn enabled the bank to grant agricultural loans. From the 1990s onwards, these cooperative societies joined Crelan’s shareholder structure and thus played an important role in the privatisation of the originally state-owned financial institution. In November 2015, all the former cooperative societies merged and CrelanCo became sole shareholder.

Crelan Bank

Crelan Bank offers a wide range of banking and insurance products for private individuals, the self-employed, and SMEs, to ca. 750,000 customers. It has around 2,250 employees (of which around 725 staff and 1,550 employees within the independent agent network) and distributes its products through a network of ca. 450 bank agencies across Belgium, as at the end of 2021.

Crelan does not want to offer its customers mere products, but rather total solutions with payment formulas, savings and investment products, forms of credit and insurance policies. Crelan relies on its own product range to this end, which it complements with products from a number of partners, each of whom a reference in their own field. This includes non-life insurance policies from AXA Belgium, life insurance policies from Allianz and investment formulas from Amundi and Econopolis Wealth Management. Furthermore, with a specialised range of products, the bank is the preferred partner of farmers and large companies in the agricultural and horticultural sector.

AXA Bank Belgium

AXA Bank Belgium is the youngest and also the largest entity of the Crelan Group. AXA Bank Belgium became a subsidiary of Crelan on 31 December 2021, when the Crelan Group acquired it from the French AXA Group.

AXA Bank Belgium offers a range of retail banking products and investment solutions to ca. 870,000 customers, primarily focused on credit, investment, and daily banking services and deposits. The company has around 2,250 employees (of which around 725 staff and 1,525 employees within the independent agent network) and distributes its products through a network of ca. 350 bank agencies across Belgium, as at the end of 2021.

AXA Bank Belgium empowers its customers, Belgian families and entrepreneurs by proactively guiding them in building and managing their assets, through tailor-made advice on home loans and investments. The bank is locally anchored thanks to its network of independent banking agents. User friendly digital tools and personal contact go hand in hand.

Today, Crelan and AXA Bank Belgium are still separate. However, the acquisition of AXA Bank Belgium will eventually culminate in a merger in which all activities will be carried out under the Crelan brand. This integration and migration process is expected to take around 27 months as from closing.

During this period, the products and processes of both banks will be aligned, and all data will be housed in one uniform IT platform. This future unified banking and IT platform will also undergo an entire transformation and modernisation. To this end, Crelan envisages a hefty IT investment of around € 180 million, around € 130 million of which are planned for IT migration and integration, and around € 50 million for the further modernisation of the IT systems.

Furthermore, with the transfer of Crelan Insurance to AXA Belgium, Crelan will completely focus on banking products. It will further complement it with insurance and investment products from renowned partners such as AXA Belgium for non-life and credit-related insurance, Allianz for life insurance and Econopolis, Amundi and AXA Investment Manager for investments. This complete offering provides the bank’s customers – private households, entrepreneurs, SMEs and farmers and horticulturalists – the opportunity to take advantage of a complete financial offer.

What was particular about the deal process?

Crelan acquired a bank bigger than itself, thereby resulting in the Crelan Group to become monitored by the ECB. Following the acquisition of AXA Bank Belgium, the Crelan Group is now monitored by the ECB and therefore subject to more stringent requirements in respect of capital, risk management, IT and governance.

The fact that that the transaction took over 2 years to complete gives only a slight hint of the complexity level of this deal. This deal required careful structuring from the outset and flexibility to adopt to the regulators’ strict requirements up until closing.

Deal structure

The consideration for the AXA Bank Belgium shares was structured to be part cash
(€ 611 million) and part in the form of a transfer of 100% of Crelan Insurance to AXA Belgium (valued at € 80 million), as further adjusted post-closing.

Financing Structure

Due to its cooperative structure (Crelan has over 270,000 cooperative shareholders), Crelan does not have deep pockets or a rich reference shareholder. This resulted in a complicated financing structure, whereby AXA, Amundi and Allianz granted respectively € 245, € 125 and € 75 million in the form of subordinated instruments. AXA and Crelan thereby amended the already complicated financial details of the transaction, with AXA Group subscribing to € 245 million in subordinated Tier 1 debt instead of acquiring a minority equity stake of 9.9% in Crelan for € 90 million, as communicated at the time of the signing of the transaction. Crelan also purchased for € 90 million the contingent convertible bonds previously issued by AXA Bank Belgium to the AXA Group.

Bankinsurance partnership

In addition, to the sale operations, the AXA Group and the Crelan group entered into a bankinsurance agreement, i.e. a long-term insurance partnership agreement in relation to Property & Casualty and credit-linked insurance extending the existing partnership between AXA Bank Belgium and AXA Belgium to the Crelan Group.

Do the management or entrepreneurs deserve a special mention? 

N.A.

Umicore and PowerCo corporate joint venture

Facts

Involved firms and advisors Umicore: Freshfields Bruckhaus Deringer LLP
Involved firms and advisors PowerCo: CMS (Hamburg)

Brief description / Deal outline:

Corporate joint venture of Umicore and PowerCo SE, the Volkswagen AG (Volkswagen) battery subsidiary, to establish the first large-scale supply chain for sustainable batteries for electric vehicles in Europe. The partnership involves appr. € 3 billion in investment.  The long-term partnership includes the production of precursor and cathode materials in Europe, which are strategically important input materials central to battery value creation. In addition, Umicore and PowerCo will collaborate on the sustainable and responsible sourcing of raw materials, an area in which Umicore is an industry leader. Finally, Umicore will be providing refining services to PowerCo and both partners aim to include, at a later stage, elements of refining and battery recycling based on Umicore’s technology and know-how into the scope of the JV.

The joint venture agreement signed on 26 September 2022, with closing being subject to customary regulatory approvals in particular. The name of the joint venture has not been decided yet and will be disclosed at a later point in time.

Why should this deal win the Award for Best Large Cap Corporate Deal?

The deal is the first of its kind in Europe and will strengthen the resilience of Europe’s supply of precursor and cathode materials, a strategically important resource for EV batteries. Production will start in 2025, with the aim of reaching annual production capacity of 160 GWh in 2030, or the equivalent of 2.2 million fully electric vehicles. In addition to affording both partners a first-mover advantage in the fast-growing European e-mobility market, the landmark joint venture has also been hailed by the partners as a major milestone to help the European Union achieve its Green Deal ambitions.

What was the deal rationale?

The partnership will provide Umicore with secured access, through firm take or pay commitments, to an important part of the European demand for EV cathode materials at guaranteed value creative returns.

It will provide PowerCo, at a significant scale, secure and cost-competitive access to Umicore’s innovative, sustainably sourced and tailored high-performance battery materials for its unified cell strategy in Europe. It will also allow PowerCo to benefit from Umicore’s proven production capabilities as well as its upstream expertise.

Umicore’s IP and know-how will be made available through a license agreement to the JV to ensure its leading technology position. Under the terms of the agreement, both partners will jointly control the JV and will equally share costs, investments, revenues and profits.

Where lies the value creation?

The JV is designed to meet both partners’ profitability and return criteria and will unlock, for each side, significant synergies and economies of scale.

What is the impact of this deal for the stakeholders? 

The deal is a major step in enabling Volkswagen’s shift to e-mobility and in meeting the terms of the European Green Deal. At the same time, value creation will be localised in Europe and a sustainable, transparent supply chain with high environmental and social standards will be created.

What was particular about the deal process?

This joint venture takes a central place in a very complex industry and value chain, where know-how retention and return models take a central place. The parties’ various interests had to be brought together in a partnership model benefitting both parties equally.

Do the management or entrepreneurs deserve a special mention? 

The creation of the joint venture is the result of a full year of negotiations with broad involvement of various teams within both JV partners, in order to bring a holistic view to the cooperation model. This joint venture model is unprecedented in the European market and therefore had to be built by the parties from the ground up.

Biobest Group acquires Plant Products

Facts

Involved firms and advisors buy side: 
Financial and Tax: PwC
Legal: Stikeman
Involved firms and advisors target: Financial and Tax: KPMG (US)  
Involved firms and advisors sell side:  Financial and Tax: KPMG (US)  

Brief description / Deal outline: 

Acquisition of Canadian based company Plant Products by Biobest Group.  

Why should this deal win the Award for Best Mid Cap Corporate Deal?  

This deal should win the Award because it is a landmark deal for Biobest which strengthens their footprint in US and Canada, two important regions in the horticulture sector.       

Biobest Group is in impressive group which was founded in 1987. They are the first company to commercialize bumblebees. Over the years, it has diversified its activity towards biological crop protection by developing a large portfolio of beneficial insects and mites mainly for covered crops. These natural products are an alternative to chemical pesticides and allow to limit the use of the latter to a last resort in the framework of an integrated pest management program.     

Based in Westerlo (Belgium), the company has production and sales entities on five continents allowing it to serve its local customers with an adapted offering, being either agricultural growers or distributors. The consulting and advice dimension of Biobest’s offering is ensured by a network of technical experts, constituting a key asset in Biobest’s value proposition. The company is committed to an organic growth strategy, supported by environmental, societal, demographic, and regulatory tailwinds. In addition, the company is engaged in a strategy of consolidation in a sector that is still fragmented at the global level, which has resulted in the recent acquisitions of Beneficial Insectary and Plant Products in North America and Biological Services in Australia.    With this acquisition, Biobest not only extends their footprint but also enlarges their impact on the value chain as they vertically integrated their main distributor.         

What was the deal rationale? 

The aim of the deal for Biobest Group was to (i) increase their footprint in Canada and the US and (ii) extend their value chain. Plant Products was already a key distributor for Biobest in this region.  

Jean-Marc Vandoorne-Feys, CEO of Biobest Group NV: “I am thrilled that we have this opportunity to invest in a company with which we have successfully collaborated for over 25 years. Plant Products has a very strong network of grower and supplier relationships in North America. Direct presence is essential to realise our mission of being the grower’s most reliable partner in this important market where specialty horticulture is growing very quickly. North America is also the world’s leading market for biocontrol, due at least in part, to a regulatory system that is conducive to innovation. With Plant Products, we are able to take a holistic approach to plant health and performance. North American growers can continue to rely on Plant Products for technical advice and a full toolkit of integrated pest management solutions. I am very pleased that Chris Stickles will continue to lead Plant Products going forward, including the full integration of both organisations’ excellent teams. I am confident this will benefit all our customers. The trusted Biobest brand remains a cornerstone of Plant Products’ offering. As part of the new Plant Products biocontrol team, growers in both Canada and USA can continue to count on their Biobest technical advisors to now provide an even broader range of solutions.”      

Chris Stickles, President of Plant Products Inc.: “We are excited to join forces with the Biobest team. Biobest strengthens Plant Products’ global perspective of the horticulture industry, and that will benefit our customers. Plant Products’ track record of growth demonstrates that we deliver consistent value to our customers and that our suppliers appreciate the unique strengths of our market approach. Together, we will further expand our global network of supplier partnerships, including biopesticides and tools for crop monitoring. We’ll build on our momentum and further strengthen our footprint in Canada and the USA.  I’m also excited about Biobest’s commitment to innovation. Recent Biobest investments in high-tech horticulture, including digital solutions for advanced crop monitoring and robotic tools for crop surveillance and pollination, speak to Biobest’s vision and compliment Plant Products’ business. The benefits of such tools extend beyond pest control, and Plant Products is in a unique position to help our customers capture the full value of these developments.”        

Where lies the value creation?

Extension of the value chain by vertically integrating a key distributor in an important geographical area for the Biobest Group. 

What is the impact of this deal for the stakeholders? 

Due to this acquisition, Biobest Group ensures continuity for the employees of Plant Products as it was still family owned. By acquiring this distribution network, Biobest also aims to increase the footprint of their biological products in the US and Canadian market.      

What was particular about the deal process?

Sofina invested in Biobest in February 2022 through a capital increase to finance the acquisition of Biobest’s main distributor, the Canadian company Plant Products. Following this transaction, Sofina became a minority shareholder of Biobest alongside Floridienne, a controlling shareholder since 2006, and Mérieux Equity Partners, which joined in 2018. 

Do the management or entrepreneurs deserve a special mention?
N.A. 

Stadsbader Group acquires BAM Contractors

Facts

Involved firms and advisors buy side:
Financial & Tax: Deloitte
Legal: DLPA Advocaten
Involved firms and advisors target:
Financial & Tax: PwC  
Legal: NautaDutilh
Involved firms and advisors sell side:
Financial & Tax: PwC  
Legal: NautaDutilh, Lazard

Brief description / Deal outline:  

The Harelbeke-based construction company Stadsbader has acquired BAM Contractors, the Belgian subsidiary of Dutch construction company Royal BAM Group. BAM Contractors’ business is complementary to Stadsbader as they hold a leading position in the Belgian construction market for large infrastructural and industrial projects for public and private clients.      

Stadsbader has its head office in Harelbeke, the location where all activities started in 1946. Today, 75 years later, the family-owned company has evolved into a multidisciplinary construction group, with various technical divisions and production sites spread across Belgium and the Northern part of France.   
Stadsbader’s core business lies in the field of infrastructure projects, construction and techniques, for both private customers and public authorities.     

Due to setting a far-reaching extended flexibility and quality as a priority, Stadsbader acquired a leading position in the Belgian contractor market. Special attention for safety, sustainability and innovation makes Stadsbader a reliable partner for projects with complex requirements.  
Each day more than 1,200 people are active on 125 construction sites in Belgium and the neighboring countries. This results in a rich and extensive portfolio with numerous references in the most diverse sectors of the corporate world.    
As a reputed contracting firm, Stadsbader is also member of the “Association of Belgian Contractors of Large Constructions” (ADEB-VBA). Mr. Dominique Valcke (CEO and owner of Stadsbader) is the vice-president of ADEB-VBA.   

In 2021, Stadsbader was rewarded for the 2nd consecutive year as the title “Best Managed Company”. The “Best Managed Companies” programme recognizes private businesses which set the highest professional standards of business performance. The awarded companies are examples of resilient entrepreneurship and sustainable growth. The programme is supported by Deloitte Private, Econopolis and KU Leuven. In addition, Stadsbader was one of three final laureates of the EY Family Business Award of Excellence 2020.      

BAM Contractors is mainly active in large civil infrastructure / construction works (f.e. Scheldetunnel, Oosterweelverbinding, etc.).     

This acquisition resulted in a growth of c. 50% for Stadsbader. Main reason for the acquisition is the complementarity of the activities. Whereas BAM Contractors is specialised in large civil projects, Stadsbader is rather active in construction, roads and tehcnics. Both groups work together on several projects, such as Oosterweel.    
BAM Contractors will continue to exist as a separate business unit under the leadership of the current management.      

Main rationale for the deals is to increase the scale of the larger group as well as realising commercial and cost synergies. It also ensures continuity for the current employees of BAM Contractors.       

Why should this deal win the Award for Best Large Cap Corporate Deal? 

Motivation 1 

Project Bridge involves a top Belgian-buyer transaction in the fast moving and challenging construction market involving one of Belgium’s leading family-owned companies in the sector, i.e. Stadsbader. After having grown significantly over the past years, Dominique Valcke and his team managed to secure growing order books and established an absolute market leading position as provider of road construction, construction and techniques services.      

BAM Contractors is well known for its experience in the field of complex civil projects and rail works. Stadsbader Group is also already an important contractor in road construction, construction and techniques with far-reaching vertical integration in the field of equipment and production entities. Stadsbader has always been in family hands, and has been led according to clear family-based values. This has resulted in consistent revenue and profitability growth, through a combination of organic and M&A growth. Although BAM Contractors has been part of the listed Dutch Royal BAM Group, the management team of BAM Contractors has always shared and operated by the same family value, hence the perfect match.     

This new chapter offers many opportunities in the further development of the activities of Stadsbader Group. BAM Contractors has an impressive order book with complex projects such as the reconstruction of the Vilvoorde Viaduct, the Nieuwe Sluis Terneuzen and the construction of the Scheldt tunnel as part of the Oosterweel project.     

With the addition of the 400 employees and € 190 million turnover of BAM Contractors, Stadsbader Group now employs 1,650 people and achieves an annual turnover of € 600 million. With this acquisition, Stadsbader Group is more than ever a multidisciplinary contractor.      

Project Bridge involved multiple elements making this deal a great landmark for our Belgian construction industry:   

• Family-owned company growing through inorganic but risk-balanced strategy.   
• Establishment of a leading multidisciplinary contracting player in the market.   
• Highly strategic deal driven by partial exit of Royal BAM Group out of Belgium.    

• Sustaining employment and ensuring a stable strategic, sustainable growth for BAM Contractors’ employees.

Motivation 2 

The divestment of BAM Contractors will support BAM Group’s capital ratio by shortening the balance sheet and will reduce liquidity and the use of bonding. Moreover, the divestment will reduce BAM Group’s exposure to large civil engineering projects.   Following the sale, Royal BAM Group will report the assets of BAM Contractors as held-for-sale as per 2021. The transaction will result in a limited book loss, which is incorporated in the 2021 results and does not change BAM’s outlook for 2021. The Group will publish its 2021 results on 17 February 2022.     

BAM Contractors holds a leading position in the Belgian construction markets for infrastructural and industrial projects for public and private clients. The company has annual revenues of more than € 190 million and approximately 400 employees. Current projects include the Scheldt Tunnel near Antwerp, the railway bridge Genk and the Metro 3 Project in Brussels (connecting tunnel North station).     

Royal BAM Group sees in Stadsbader Group a trusted partner for the future development of BAM Contractors and its employees. The group is restructuring BAM’s portfolio of businesses to focus on markets and projects where it can leverage its proven competitive strengths and serve the growing demand for sustainable solutions in the construction industry. After the successful completion of the divestment of its operating companies BAM Deutschland and BAM Galère, is the intended sale of BAM Contractors another important step in delivering the strategy ‘Building a sustainable tomorrow’.     

The two companies will be operating side-by-side as sister companies allowing the expertise of both to be used for winning mega projects of a complex nature. The timing of this deal is also great as these types of mega projects are upcoming in Belgium (for example the projects related to Oosterweel, Viaduct Vilvoorde and the Brussels Ring Road).    

Motivation 3 

This deal should win the Award as it relates to an important milestone for this Belgian based family-owned business. It results in an important growth (c. +50%) of the Group. It directly impacts the lives of the 400 employees working with the BAM Group by providing continuity. The new Group will also have a very broad skillset in the construction market. Besides the construction and technique BUs, Stadsbader will now also become an important player in the market for large civil infastructure works.      

This deal is the result of the strategical decisions taken at Koninklijke BAM to dispose of their Belgian activities. It required a detailed preparation phase in which the preparation of the stand-alone financials played an important role. Several aspects were important here: (i) the ties with with Dutch HQ had to be cut (ii) a reorganisation was needed to dismantle the Belgian HQ and move key employees to the BAM Contractors perimeter (iii) BAM FM is the facility manager for all BAM operations in Belgium. Meaning all assets (cranes, machinery, etc.) relating to the transaction perimeter needed to be identified and go along in the transaction.  

This was a complex excercise but important to give Stadsbader suffcient comfort on the stand-alone income statement, working capital and net debt.  

What was the deal rationale? 

Next to the elements already mentioned above, the main drivers and rationale for Project Bridge can be summarized as follows:   

• Shared long-term vision and ambition  
• Continuity of existing operations   
• Retention and attraction of personnel   
• Operational experience and knowledge of the market   
• Commercial and operational synergies    

Stadsbader has an extensive know-how and strong presence related to infrastructure projects, construction and techniques. Stadsbader already gradually extended these activities to activities supporting its core-business, such as environmental activities.    

Stadsbader wants to further develop markets where it sees future growth and profitability, such as the civil engineering market. Stadsbader believes BAM Contractors fits in this strategy.     

While Stadsbader is already engaged in civil engineering projects, they are confident that the acquisition of BAM Contractors will accelerate the further development of this market both in Flanders as in Brussels where Stadsbader has been under-represented. Stadsbader has a strong operational focus and values the expertise of all employees of BAM Contractors.     

Stadsbader will consider BAM Contractors as its specialist civil engineering company in the group. Stadsbader aims to integrate its current civil engineering activities in BAM Contractors on the one hand and the infra (=road building) activities of BAM Contractors in the more developed Infra division of Stadsbader on the other hand, realizing a synergy between Stadsbader and BAM Contractors and a win-win for both companies.      

More in particular, Stadsbader counts on the expertise in civil engineering and track of the current employees of BAM Contractors to further develop these activities as a separate company within the Stadsbader group.    

At the same time, the employees of the Infra division of BAM Contractors can contribute to the existing Infra expertise of Stadsbader, will also be challenged and can further develop themselves within the Infra division of Stadsbader.      

Stadsbader believes that a strong regional and local presence is important. The sites of Neder-Over-Heembeek and Sint-Truiden are fully complementary to the current Stadsbader locations.  

Where lies the value creation? 

See previous question regarding deal rationale and value creation.  

Considerable synergies are expected from this deal, both in terms of:  

1. Topline growth through complementary end markets. 
2. Shared services and hence cost optimizations. 
3. Better spread of risk profile across the different types of projects within the group. 
4. Attraction of new personnel in a market hunted by a general war for talent.     

BAM Contractors, within the Stadsbader Group, will continue its activities as a sister company of Stadsbader NV. Both companies will continue to function autonomously, retain their own market and will operate in a complementary manner. Jan Folens will remain in charge of BAM Contractors. The aim of the acquisition of BAM Contractors is to use shared expertise and to further increase vertical integration.  

What is the impact of this deal for the stakeholders?   

For Stadsbader, the acquisition of BAM Contractors perfectly fits within the general strategy of diversifying activities, further growing the group and attract/retain talent. This provides Stadsbader with the opportunity to keep on showing sustainable, profitable growth for employees through a more diverse and broader client base. Moreover, this also frees up more means to continue to invest in innovations, also related to ESG and environmental building.  

For BAM Contractors’ employees, Project Bridge provided stability and job certainty in a family-owned environment after years of uncertainty in a corporate restructuring setting.   

For BAM, this transaction marks a further step forward in delivering its strategy ‘Building a sustainable tomorrow’. BAM is restructuring the portfolio of businesses to focus on markets and projects where the Group can leverage its proven competitive strengths and serve the growing demand for sustainable solutions in the construction industry. 

The divestment of BAM Contractors BV shortens the Group’s balance sheet and reduces liquidity and the use of bonding. The transaction resulted in a limited book loss, which was incorporated in the 2021 results, as published on 17 February 2022.    

What was particular about the deal process? 

Project Bridge has been successfully completed in a very challenging M&A market environment, and buyer/seller managed to overcome a number of challenges along the way.     

BAM Contractors realized significant losses over the past years driven by failed projects leading to a challenging valuation exercise. Moreover, the type of projects executed by BAM Contractors is by nature much larger and risky compared to Stadsbader projects. Also, the challenging general economic situation (amongst others driven by covid-19) led to a cross-border deal characterized by many challenges. This led to a long process (NBO submitted during the summer of 2021, closing May 2022) but successful closing. Having a family-owned buyer engaging in a deal setting with a corporate, listed seller imposed challenges of its own.     

Very particular about this process and sector is the takeover of bonds & guarantees related to ongoing projects within BAM Contractors. Given the nature of larger infrastructure projects, SPVs are made with different partners, for which bonds & guarantees have to be provided. Challenge during project Bridge was the takeover of bonds and guarantees for projects already ended.       

Another challenge related to the structure of BAM Contractors were the numerous carve-in/carve-out elements in the transaction structure. This made financial due diligence (e.g. net working capital) not easy to perform.      

Through a very close collaboration with both M&A advisors (Deloitte on the buy-side, Lazard/PwC on the sell-side), buyer/seller teams and lawyer teams, Project Bridge led to a great outcome for all parties involved. Stadsbader managed to finance and guarantee the transaction through existing lines with the Stadsbader group.  

Do the management or entrepreneurs deserve a special mention?

The track-record of a family-owned company taken over and led by CEO Dominique Valcke has simply been impressive. Stadsbader has always been able to perfectly balance the right risk balance with sustainable profitable growth. Project Bridge is a very nice testimonial of this, as the challenges as described have all been overcome through open and transparent communication along the way.      

The above was also clearly shown by means of the advisory counsel within Stadsbader to challenge evaluations and decisions made throughout the process. This also perfectly balanced with inputs and involvement from the broader management team.      

Also the attitude and skillset of the BAM Contractors management team led by Jan Folens significantly contributed to the successful closing of the deal. Being part of a listed group with lots of corporate restructurings over the past years made it very challenging for them to lead the business. In the end, it was the same mindset and shared values that resulted in this great transaction outcome.   

Visma acquires Teamleader

Facts

Involved firms and advisors buy side: 
Legal: Lydian
Tax & financial: EY
Involved firms and advisors target: N.A.
Involved firms and advisors sell side: 
Legal: DLA Piper (Jeroen De Wit and management), Argo Law (sellers), Olislaegers & De Creus (Ben Vloemans)
Financial/Transaction Services: Arma Partners  

Brief description / Deal outline: 
Norwegian company Visma, which offers a suite of accounting, payroll, HR, and other business software products to more than 1.2 million SME customers across the Nordic, Benelux and Baltic regions, has acquired Belgian software developer Teamleader from investors Fortino Capital, Keen Venture Partners and PMV.      

Founded in 2012, Teamleader has grown well beyond its Belgian borders, operating in France, Spain, Italy, the Netherlands, and Germany, and counts over 13,000 organizations amongst its client base. According to the company, over € 10 billion worth of invoices have passed through Teamleader’s systems.      

Why should this deal win the Award for Best Large Cap Corporate Deal? 
Besides the particularly quick timeframe the deal had to be closed in, the deal has also proven to be a complex one. On the one hand, the acquisition entailed the unwinding of a stock option plan prior to closing. On the other, the complexity of the deal was only increased by the fact that more than 80 sellers were involved in the transaction. Such considerations therefore led to the drafting, negotiation and signing by each individual party of a large number of contractual documentation. There are also post-closing formalities amongst which the dissolution and liquidation of a foundation (Stichting Administratiekantoor).    

What was the deal rationale?
Teamleader was incorporated in 2012 by a.o. Jeroen De Wit when he was still a college student. Fast forward to 2022 the company currently has around 190 employees and serves more than 11,000 clients in Belgium, the Netherlands, Germany, Spain, France and Italy. Such exponential growth was made possible by both De Wit’s hard work and dedication, as well as the backing by major investment firms such as Fortino Capital and PMV.      

With ambitions to penetrate the European market, Teamleader now gains access to the positioning and resources of Visma to do so. Moreover, the typical acquisition style of Visma consisting of retaining the management of the acquisition target on board, will further facilitate De Wit’s plans of European expansion.      

It is also to be noted that the acquisition of Teamleader may play an important role in Visma’s potential IPO plans. Visma has been on a steady quest to take on new investors via secondary share sales and snapping up rising star companies, presumably in efforts to further strengthen its market position ahead of any rumored IPO plans.  

Where lies the value creation?
Already eager to conquer the European market, De Wit has now garnered means to accelerate such process through the strong support structure and financial stability of Visma. Although the firm could have done it on its own, the acquisition is meant to work as a catalyst to the process. Not only that, but Visma will also offer its usual acquisition approach of retaining the management of the target on board. This will allow Teamleader to continue to operate under its own name, with its current team of 180 employees and under the continuous management of De Wit. The firm will thus be able to stand out the way it would like to on the market without being overshadowed or anonymized by the acquisition process.  

What is the impact of this deal for the stakeholders?  
The main impact will be for Jeroen De Wit and management, since they are now part of a larger group which requires management to answer to other levels within the Visma group while over the years, they mainly managed Teamleader on their own with the support and input of their investors. Simultaneously, the acquisition by Visma sensibly opens up the realm of possibilities for Teamleader’s growth, especially on the European market.  

What was particular about the deal process?
This deal contained several particular elements which made it highly complex, intensive and fast-paced, namely the high number of parties involved (more than 80 sellers in total), the reinvestment of several parties as well as the pace of the transaction.     

More specifically, a stock option plan had to be unwound prior to closing, following which some of the founders/senior managers remained on board post-closing. The foregoing led to a large number of contractual documentation to be drafted, negotiated and signed by each individual party. Finally, Lydian also continues to assist on several post-closing formalities such as the dissolution and liquidation of a foundation (Stichting Administratiekantoor). 

Do the management or entrepreneurs deserve a special mention?
Teamleader was incorporated by Jeroen De Wit and several of his classmates back in university. Not only was he a very young CEO but he managed to achieve impressive growth for his company in a relatively short period of time. Having a young forward-thinking and proactive CEO has instilled a culture of hard work and dynamism which has contributed to a great reputation for the firm. De Wit has long been open about his ambitions to make Teamleader a European household name in its field and considers this transaction to be the best catalyst for that purpose, with already more than half of the firm’s turnover (which amounted to € 20 million in 2021) coming from outside of Belgium and the Netherlands.   

Bain Capital acquires House of HR from Naxicap Partners

Facts

Involved firms and advisors buy side: EY, Lazard, Latham & Watkins, NautaDutilh,  Kirkland & Ellis
Involved firms and advisors target: Freshfields, Allen & Overy, J.P. Morgan
Involved firms and advisors sell side: Stibbe Brussels (Conny Vandendriessche), Freshfields Bruckhaus Deringer (Management), Edge Avocats (Naxicap Partners), Lydian (Naxicap Partners)

Brief description / Deal outline:
The French private equity fund Naxicap Partners sold its majority stake in House of HR to Bain Capital, one of the world’s leading private investment firms. Bain Capital will hold 55% in the new structure and Naxicap, founder Conny Vandendriessche and House of HR Management will hold the remaining equity.    

This is by far the largest private equity deal in Belgian history to date (more than double the size of the second biggest deal).  

 As a leader in HR services, House of HR places over 57,000 people each month across small, medium and large companies. Started in 1995 with one Accent office in Roeselare, Belgium, House of HR has grown and blossomed into a European group with over 4300 internal employees, €2.2 billion sales in 2021, and offices in Belgium, the Netherlands, France and Germany and recruitment agencies in Poland, Romania, Hungary and Spain, amongst others.   

As one of the top private equity firms in France, Naxicap Partners – an affiliate of Natixis Investment Managers – has € 6 billion in assets under management.      

Why should this deal win the Award for Best Large Cap Private Equity Deal?  

Motivation 1 

The new strategic partnership will maintain the company’s entrepreneurial spirit, help House of HR scale its unique platform into new markets and increase digital investments. The deal values House of HR between € 2.8-2.9 billion, which makes it the largest debt-financed buy-out by a private equity fund in our country.    

As a leader in HR services, House of HR (“HoHR”) represents an appealing investment with a presence across attractive markets, a strong track-record of both organic and external growth underpinned by strong employee ownership which has generated sustained above-market growth for more than 10 years, and a clear strategy to become #1 European provider of specialized HR solutions. By focusing on the specialty staffing sector, HoHR will benefit from multiple attractive long-term trends including significant wage inflation, globalization, labor scarcity, changing skillset requirements and the development of flexible work.  

In 2017, Bain Capital already invested in the sector with the British HR and payroll services group Zellis.     

House of HR intends to continue its growth path, based on strong organic growth combined with targeted and specialized M&A in existing markets, DACH countries and the Nordics. All supported by continued focus on digitisation while maintaining a high standard when it comes to attention to people, both internal employees but also all its candidates.   

Since the first investment by Bain Capital in 2012 in Accent Jobs (now House of HR), the Group has executed 37 acquisitions and has known two CEOs, both of whom were instrumental in the success of House of HR.    

Motivation 2 

This is by far the largest private equity deal in Belgian history to date (more than double the size of the second biggest deal).  

The new strategic partnership will help House of HR scale its unique platform into new markets and increase digital investments.  

Moreover, the deal was extremely complex in the sense that it involved more than 600 managerial shareholders who will sell their stake and at the same time massively reinvest in the company.   

A group of financial institutions has committed to provide a debt financing package in support of Bain Capital’s acquisition of a majority stake in House of HR. The company’s existing Term Loan B, Senior Secured Notes and Senior Subordinated Notes are expected to be refinanced with private, including 2nd lien TLB facilities, and/or public debt financing on terms customary for similar acquisition financings at closing of the acquisition, which is expected to occur by the end of Q4, subject to customary regulatory approvals. In the meantime, EU antitrust approval has been obtained.    

Motivation 3 

• Record-breaking, largest transaction in the Belgian market. 
• House of HR has grown to a recognised European leader in HR services. 
• Bain Capital Private Equity is one of the world’s leading private equity firms.   

What was the deal rationale? 

As a leader in HR services, HoHR represents an appealing investment with a presence across attractive markets, a strong track-record of both organic and external growth underpinned by strong employee ownership which has generated sustained above-market growth for more than 10 years, and a clear strategy to become #1 European provider of specialized HR solutions. 

Naxicap as private equity fund was already invested in House of HR since 2012, it was therefore time for them to sell their stake. However, as Naxicap is a firm believer of the company and wants to continue to contribute to its growth and future development, Naxicap has decided to stay on board as a minority shareholder and reinvest a part of their proceeds.     

At the same time, the 600 managerial shareholders also reinvest massively in the company.      

For Bain, this is a nice addition to their portfolio. 

Where lies the value creation? 

Bain will enable the group to further grow in the coming years. They now have a worldwide PE fund which gives the group further possibilities.      

House of HR has had a substantial organic and external growth since the entry of Naxicap into its capital in 2012 through numerous acquisitions, including in countries like France, the Netherlands, Germany, Spain, Poland and Romania.     

With the support of a worldwide fund like Bain, this aggressive expansion policy can be continued or even accelerated.  

What is the impact of this deal for the stakeholders?   

As mentioned before, more than 600 managers will reinvest and, as a result, will be intrinsically and personally linked to the success of the group.  

As mentioned on its website, House of HR is deeply convinced it has a role to play when it comes to environmental, social and corporate governance (ESG). The group is committed to have a truly positive sustainable impact on the world by staying true to its dream of changing lives, connecting and amplifying boundless talent to win in a world of change. So as to create a long-term sustainable growth, House of HR applies a strict focus on environmental, social and governance issues. Set up in 2020, this ESG-process has to develop an elaborated sustainability strategy and governance, supported by the expertise of an external expert.    

First, House of HR has defined its four key stakeholders, being the groups of people, organizations and channels who will be impacted and involved in the ESG story. The stakeholders defined are, in this order, first all employees, and second all customers who include clients, prospects, candidates, consultants, and temp workers. Thirdly are investors, shareholders, and financial institutions. Finally House of HR also aims to involve education institutions, training centers and the general public by social media.  

In the near future, a structured process will be rolled out to regularly consult the stakeholders. As such, House of HR wants to stay informed about what really impacts them.       

Another important aspect of House of HR’s role in society is the integration of the UN Sustainable Development Goals (SDGs). These goals deal with aspects such as gender equality, health and wellbeing, education and reduced inequality. House of HR also has an ESG Charter which can be found on their website for the purpose of aligning with such sustainable development goals.  

• House of HR has a multi-brand strategy stimulating local entrepreneurship to serve specialized markets allowing it to be one of the most growth-focussed and profitable platforms in the world.   
• House of HR continuously looks for new opportunities to invest in companies that can complement the House of HR offering, in terms of either industry specialization (e.g. healthcare, IT, public sector), candidate focus (e.g. engineering, legal, financial) or geographic spread.   
• House of HR’s focus on digital solutions for both candidates and customers helps meet workers’ increased demand for flexibility. House of HR is known for its market leading digital solutions, such as NOWJOBS (fully digital matching platform for students and flexworkers), SWOP, Gighouse and Book’u. 
• House of HR: “We intend to continue our growth path, based on strong organic growth combined with targeted and specialized M&A in existing markets, DACH countries and the Nordics. All supported by continued focus on digitisation while maintaining a high standard when it comes to attention to people, both internal employees (our Happy Rebels) but also all our candidates.”   
• Bain Capital: “We have been impressed by HoHR’s specialized business model, underpinned by strong employee ownership which has generated sustained above-market growth for more than 10 years. This combined with a unique track-record of successful M&A in this sector, which we look forward to accelerating. We’re pleased to be embarking on this partnership, with Naxicap and Conny Vandendriessche both keeping their wealth of expertise in the business.” 

What was particular about the deal process? 

As mentioned and as can be expected for a deal of this record-breaking size, the deal was extremely complex, involving private equity funds on both sides, more than 600 managers-shareholders, the target group being active in 10+ European countries, deal requiring EU antitrust approval, a complex equity and debt financing structure and finally involving complex and detailed management incentive schemes which take into account the personal tax situation of managerial shareholders spread out across Europe.  

Do the management or entrepreneurs deserve a special mention?  

House of HR is a management-driven business which is evidenced by the more than 600 managerial shareholders, under the leadership of one of the most successful Belgian entrepreneurs of the last decade, Conny Vandendriessche, and its dynamic CEO Rika Coppens.  

Karo Pharma acquires Sylphar from Vendis Capital

Facts

Involved firms and advisors buy side: 
Legal: White & Case
Financial: Centerview Partners
Involved firms and advisors target: see sell side
Involved firms and advisors sell side: 
Financial: Rothschild & Co, Eight Advisory
Legal: Argo Law 
Commercial: L.E.K.
Tax: Eight Advisory  

Brief description / Deal outline: 

Vendis Capital, Robin List, and the founders of Nutravita and Alpha Foods (the ”Shareholders”) sold Sylphar to Karo Pharma (backed by EQT) for a consideration of € 290 million in cash and € 10 million earnout payable upon certain conditions. 

Why should this deal win the Award for Best Large Cap Private Equity Deal?  

• Exceptional result obtained for all shareholders: 

• • The process was primarily focused on financial sponsors and PE-backed strategics and resulted in a highly competitive auction process.  
  • Following an intensive preparation phase with a lean management team, there was significant interest in the opportunity and a number of compelling non-binding offers from financial sponsors and strategics backed by PE- funds was received.  
  • The indicative offer from Karo Pharma / EQT was the most competitive and reflected the high-growth profile of the business and a strategic premium. The offer was also actionable on a short timeframe.  
  • The price was at the very upper range of comparable transactions during an expeditious due diligence phase. 
  • Karo Pharma acquired the Sylphar Group for € 290 million on a cash and debt free basis (Enterprise Value) resulting in a >25x EV/EBITDA, and an additional payment amounting to € 10 million to be paid if certain conditions were met in relation to future growth M&A targets for the Sylphar Group (earn-out mechanism). These conditions have been met.  

•  Complexity of the transaction: 
  • A very competitive process (following an extensive pre-marketing to a wide range of investors, resulting in significant interest from industry leading strategics, PE-backed strategics and financial sponsors) whilst giving Karo Pharma / EQT and a small group of PEs the opportunity to pre-empt the broader process on an accelerated timeline.  
  • Educating potential buyers on the complexities around Sylphar’s business model.  
  • An earn-out mechanism was put in place to make sure the shareholders of Sylphar could benefit from future M&A pipeline (earn-out mechanism installed on the successful completion of an acquisition which was at the time under exclusivity).  
  • The acquisition has been financed by way of additional credit facilities, including an equity bridge loan facility with a tenor of twelve months, which have been provided by certain of the Karo’s existing lenders.  
  • A very attractive Management Incentive Program was negotiated for the managers of Sylphar who were interested to participate into the upside potential of a combination of Sylphar and Karo / EQT.  

• Speed of the transaction: auction and pre-emptive process and due diligence workstreams (Financial, Legal, Commercial, Tax, …) in a very short timeframe. Less than a month between the beginning of due diligence and the signing of the transaction.  

• Opportunity to re-invest (part of) the proceeds into the combined entity: the management of Sylphar was offered the opportunity to re-invest (part of) their proceeds into a very attractive Management Incentive Program which would allow them to benefit from the upside potential of the combined entity following realization of the synergies and continuous outstanding performance of each company.  

What was the deal rationale? 

Sylphar is highly complementary to Karo pharma, with an excellent fit to their strategy and vision, the acquisition brought fast-growing consumer-oriented brands and a unique management team excelling in e-commerce and digital marketing.  

Karo estimated that the transaction would bring synergies to both Sylphar and the broader Karo Group, predominantly in the form of sales synergies. The transaction further enabled Karo to build a fast-growing pan-European consumer healthcare company with distinct category and brand positions.   

The transaction will also add strong assets to Karo Pharma as well as capabilities and expertise within e-commerce and digital transformation.   

Where lies the value creation? 

• Revenue growth: 

• • Based on the significant synergy potential between Karo Pharma and Sylphar (including fast-growing consumer-oriented brands).  
  • Applying Sylphar’s digital channel expertise to Karo’s brands, that are mostly sold on the traditional brick & mortar channel. 
  • The combination of cutting-edge teams excelling in e-commerce and digital marketing.
• EBITDA growth: 
  • Improving operations following the combination of expertise from both Karo and Sylphar in the healthcare sector.  
  • Following expected digitalization on the back of Sylphar’s expertise.

• Success in innovation on the back of Sylphar and Karo’s track-record, expertise and R&D capabilities allowing to bring products into the market ahead of competitors by following the trends / customer needs via various digital platforms. 

What is the impact of this deal for the stakeholders?   

The management of Sylphar was offered the opportunity to re-invest part of their proceeds into a very attractive Management Incentive Program which would allow them to benefit from the upside potential of the combined entity following realization of the synergies and continuous outstanding performance.  

Society at large will benefit from the combination of the R&D capabilities of Sylphar and Karo in the Healthcare sector. Moreover, these products will be available to a broader audience due to the e-commerce expertise that Sylphar will bring to the combined Group. 

What was particular about the deal process? 

• Overall strategy, timing, and tactics of the transaction to deliver an attractive valuation for Sylphar including multiple buyer tracks to allow Karo / EQT to pre-empt the process whilst maintaining competitive tension.  
• Expedited Round 2 process with less than a month between the start of due diligence and the signing of the transaction. 
• Performing extensive pre-marketing to a wide range of investors, resulting in significant interest from industry leading PE-backed strategics and financial sponsors.  
• Providing strategic insight on how to position and educate potential buyers on the complexities around Sylphar’s business model. 
• In-depth analysis on current trading to give comfort around the achievability of the FY21B EBITDA figure on the back of seasonality in Q4.  
• Extensive preparation of marketing materials and equity story, notably with regards to sustainability of the Amazon channel, new product development and geographical expansion by brand. 
• Performing a lender education process with the aim of achieving the best possible financing conditions. 
• Management of the auction process, pre-emptive process and due diligence workstreams in a short timeframe.    
• Negotiations of commercial terms including an earn-out mechanism installed on the successful completion of an acquisition currently under exclusivity (confidential).  
• Extensive review of legal documentation and assistance in negotiating management’s reinvestment in the Karo / EQT holding. 

Do the management or entrepreneurs deserve a special mention?   

Sylphar CEO, Robin List, has shown true leadership capabilities within its company, especially during the integration periods following the acquisitions of Nutravita and Alpha Foods but also during the entire process. Robin made sure that everything was made in the best interest of all shareholders.  

The founders of Nutravita and Alpha Foods have shown incredible entrepreneurial skills by creating two fast-growing companies but also through the integration within Sylphar, sharing their deep knowledge of the digital world. Nutravita is an innovative and best-selling digital-first brand in the VMS category with significant success on Amazon offering a range of products to optimize everyday health & wellness. Alpha Foods is a loved and fast-growing brand in the VMS category that has been able to build strong brand awareness and followership through its high-quality vegan lifestyle & superfood products fuelled by differentiated capabilities in digital marketing. 

Lone Star Funds acquires Manuchar from Ackermans & van Haaren

Facts

Involved firms and advisors buy side: 
M&A: BNP Paribas
Legal: Stibbe; Simpson, Thacher & Bartlett; Kirkland & Ellis
Finance and IT: KPMG
Tax: PwC
Commercial: BCG
Insurance: Marsh
Environment: ERM
Involved firms and advisors target: see sell side
Involved firms and advisors sell side: 
M&A: Rothschild & Co
Legal: Allen & Overy
Finance, Tax and IT: Deloitte
Commercial: Roland Berger
Insurance: Marsh 

Brief description / Deal outline: 

After 15 years of co-shareholding, the Maas family, Ackermans & van Haaren and Management sold their stakes in Manuchar, the leading chemical distributor across emerging markets and headquartered in Belgium, to the US private equity fund Lone Star Funds and Management. 

Manuchar is a company active in chemical distribution with a focus on emerging markets, headquartered in Antwerp. The company has been in PE-ownership for years, with a minority stake owned by Ackermans & van Haaren (“AvH”). The company was a hidden gem with a solid track-record of organic growth, growing until over € 2 billion revenues in 2021 (+10% sales CAGR 2017-2021). In January 2022, a majority of the shares was acquired by one of the largest PE funds in the world: US-based Lone Star Funds (“Lone Star”).   

Why should this deal win the Award for Best Large Cap Private Equity Deal?  

Motivation 1 

Founded in 1985 by the Maas Family and current CEO Philippe Huybrechs, Manuchar was initially set up as an international trader of chemicals active across emerging markets (Brazil, LATAM and French speaking African countries) with a focus on the Home Care industry. Starting in 1993, the company gradually diversified its activities by investing in a chemical distribution network in selected countries in LATAM, Africa and Asia next to the its trading activities.   

In 2007, AvH Growth Capital entered Manuchar’s share capital alongside the Maas Family and Management. The partnership between AvH, the Maas family and Management has enabled Manuchar to accelerate its expansion across geographies and end-markets through targeted investments in organisational capabilities, local teams, and strategic distribution assets. This has resulted in the further diversification of the company’s product offering beyond its leading market positions in the Home Care sector to Agriculture, Food & Feed, Personal Care and other end-markets and in the further build-out of a leading integrated distribution platform across geographies. Building on this well-thought internal set-up, Manuchar has been able to act as a natural consolidator in the markets where it operates thanks to its DNA of having strong local management “in charge” of their operations. In addition, leveraging on the strength of the model built out during previous ownership, Manuchar was able to perform very well throughout all recent crises (Covid-19, global supply chain issues, inflation, Russo-Ukrainian War), consistently living up to its mission: “We keep your production running. Anytime. Anywhere”.  

After 15 years of successful development under the ownership set-up with AvH, the Maas family and Management, Manuchar’s shareholders had decided that the group was ready for the next phase of its growth story.   

Throughout the sale process, Manuchar enjoyed interest from a very diversified group of strategic as well as financial buyers. Through a careful and broad pre-marketing process, only a limited selection of bidders was allowed to progress on the opportunity, after thoroughly testing and assessing their interest. Lone Star outpaced its competitors and the transaction was announced in January 2022. Lone Star acquired 80% of the shares and reinvesting management acquired c. 20% (c. 70 managers) of the shares. After a well-structured submission process, the transaction was swiftly approved by antitrust authorities in the various territories where Manuchar is active, and the transaction was closed end of June 2022.   

With Lone Star, Manuchar is engaging with a leading global private equity firm which will provide the necessary support and capital structure to realize the company’s high ambitions for the future. This deal is a great example of the successful combination between the long-term Belgian family holding, AvH, and family-owned companies, deploying patient capital to create long-term value and large successful companies.  

It is a success story of a Belgian company under Belgian ownership evolving into a true global leader with the support from AvH. The company has grown from its homebase in Antwerp into a global leader in emerging markets across all continents. AvH’s long-term view and guidance over the years, together with the Maas family and Management’s hard work and dedication, have allowed the company to develop from a chemical trader to a full chemical distribution platform across emerging markets.  

Under the ownership of Lone Star, the company is set to accelerate its growth and evolve further into a true global leader in both emerging and developed markets amongst others by accelerating their M&A build-up.   

This partnership marks a new milestone in building a leading chemical distribution platform across emerging markets with the aim to further strengthen Manuchar’s global network, both geographically and in product offering. The new shareholder’s goal is to take a leading role in the consolidation of the chemical distribution landscape in developed and emerging markets. Furthermore, Manuchar will continue to capture the high growth potential of emerging markets through investments in people and strategic infrastructure. In addition, it will leverage its strong distribution platform and leading market positions in the Home Care industry to further expand its product offering in Agriculture, Food & Feed, Personal Care, and other end-markets.  

Motivation 2 

• Deal value   
• Local importance: Manuchar is one of the leading players based in Antwerp with global activities.   
• The deal aims to allow Manuchar to further expand its leading chemical distribution platform across emerging markets both geographically and in product offering.    

What was the deal rationale? 

By partnering with Lone Star, Manuchar’s shareholders got the chance to reap the fruits of their long-term vision and dedication to the company. For AvH, as a long-term investor, after 15 years, it was the ideal moment to exit and allow a new international shareholder to further build out the enormous potential of Manuchar as a global chemical distributor.  

With this deal, Lone Star acquires a global distribution platform which it can build out further. Lone Star’ size and presence will allow Manuchar to accelerate its growth ambitions in emerging and developed markets across the globe through both organic and inorganic growth.  

Management retains a large minority stake and can benefit from such future growth potential, after having built and managed the company as co-shareholders in the previous phase. 

Where lies the value creation? 

Under the Ackermans & van Haaren ownership from 2007 until 2021, revenue grew steadily at a CAGR of >10%. Over the holding period, Manuchar quadrupled in size. EBITDA increased at a CAGR of >13%. EBITDA margin increased from around 4% to more than 6%, driven by the increased weight of high-value added local distribution activities.  

During the Ackermans & van Haaren ownership period, the company invested in strategic local assets which serve as a basis for growth in the local distribution activities. The company transitioned from a trader with distribution activities into a true chemical distribution platform with proprietary strategic assets. Between 2007 and 2021, Manuchar invested in local assets in Vietnam, Argentina, Brazil, Ecuador and other countries. In 2015 the Company acquired a majority stake in Fertisanta, a Brazilian Company carrying out port operations, warehousing and distribution activities in and around the port of Imbituba in Brazil, which has become one of the key footprints of Manuchar worldwide. Other acquisitions in the AvH holding period include Transglobal, Global Trend, Imbituba Fertilizantes and Graneis Imbituba in Brazil, Unichem in Ecuador and Fertinagro in Colombia. 

What is the impact of this deal for the stakeholders?   

Accompanied by its new shareholders Lone Star, Manuchar is perfectly positioned to further grow its global presence in emerging markets as well as to gain access to developed markets and hence to further strengthen the company’s overall position and stability. By growing in size, Manuchar will be able to have more control on the full supply chain, allowing the company to even further improve its reliability towards its customers and continue to live up to its mission, “We keep your production running. Anytime. Anywhere.”  

Its clients and suppliers will be able to enjoy the comfort of working with a company that is backed by a large and financially strong shareholder.   

In the context of disrupted supply chains and increasing scarcity, this allows chemical producers in emerging markets to continue operations and continue supply of life necessities to end users in those markets.  

By growing into additional geographies, Manuchar will enable local operations in currently unadressed regions and this will foster local economic activities and improve accessibility to home care, personal care, agriculture, food and other necessary consumer goods for the local populations.   

Historically, Manuchar already attached a great importance to ESG across its operations. As financial markets and private equity funds are increasingly valuing ESG criteria in their investment selection criteria, Lone Star will further invest together with Management in strengthening Manuchar towards an even more sustainable way of working throughout the full organisation.   

Lastly, through this deal, a large group of key managers has been able to reinvest or invest for the first time, hence aligning interests throughout the whole company and confirming management’s belief in Manuchar’s capacities for future growth. 

What was particular about the deal process? 

Prior to the process, Manuchar was renowned in the market for its core focus on Soda Ash and Sodium Sulphate. Although this was a significant part of the company’s business, especially historically, Manuchar had successfully diversified its focus towards other chemicals for a variety of other sectors. Therefore, during the preparation phase, Rothschild & Co assisted in strategically repositioning the company towards a full range chemical distributor comparable to companies like Azelis, Brenntag, IMCD and Univar, and focusing on selected resilient end-markets such as home care, agriculture, food & feed and personal care in emerging markets.  

Additionally, the company had a historic reputation for being a trader, as this was the origin of activities. Throughout its development, the company had evolved into a true distributor with local own assets on strategically valuable locations, own teams, local partners and even own port operations and concessions. The company’s legacy trading services were complementary and provided cost and transport synergies with the local distribution operations. As these trading services were fully back-to-back and credit insured, these do not add risks to the operations. The combination of both activities is a unique and valuable model, which needed to be clearly explained to the market.   

Next to the strategic repositioning of the company, Rothschild & Co also facilitated the rollover of the operational financing facilities which are core to the trading services for a total amount of c. $ 1 billion with the existing relationship banks. Obtaining this rollover and even extending operational credit facilities were paramount to guarantee the continuation of the existing short-term financing, and hence the operations, in co-existence with the acquisition financing from Lone Star. Manuchar is thankful for the support of its credit banks and especially the four Belgian banks that have supported this transaction.   

Lastly, the process was run during a time of great disruption in global markets and notably in global supply chains, following Covid-19 related lockdowns, disrupted global trade, container shortages, port congestion issues and a blocking ship in the Suez-canal, and moreover emerging markets were generally hit harder than developed markets. Despite these pressures, Manuchar succeeded in showcasing its added value as being a true global distributor, with access to proprietary local stocks across the globe and agility in operations to continue supply to all customers. Despite initial questions on the effect of such impacts, the company outperformed its budget during the process and showed its inherent resilience. Throughout the various interactions, Lone Star became increasingly convinced of this resilience and the value of Manuchar’s unique business model. 

Do the management or entrepreneurs deserve a special mention?   

As co-founder, Philippe Huybrechs deserves a special mention for his incredible leadership and dedication towards Manuchar over its +35-year history. Philippe started the company with the operations in Brazil during his time abroad for Maas Shipping Company. Together with the Maas Family, and as of 2007 with the support of AvH, Philippe built the company from its very first shipment to a multi-billion revenue with worldwide activities. In all those years, Philippe has been a key factor in Manuchar’s success across the globe. He is a great people manager and a born entrepreneur, capable of building a great and loyal team and leading it towards great successes. 

Prophix acquires Sigma Conso from Fortino Capital Partners

Facts

Involved firms and advisors buy side:
Financial: Deloitte  
Legal: Eubelius, Skadden, Blakes  
Tech: Palo Alto Strategy Group  
Customer interviews: EY  
Debt financing facilitation: J.P. Morgan  
Involved firms and advisors target: N.A.
Involved firms and advisors sell side: N.A.  

Brief description / Deal outline:
Sigma Conso, a European leader in financial consolidation software was bought by Prophix, a Canadian financial planning software to create a global leader in Corporate Performance Management SaaS software serving the mid-market. 

 Why should this deal win the Award for Best Large Cap Corporate Deal?
Sigma Conso, a financial consolidation and reporting software company out of Anderlecht, was sold to Prophix, a Canadian financial planning and budgeting software company, in October 2021. Sigma Conso got acquired by Fortino Capital Partners in June 2020. Prophix got acquired by Hg in February 2021.     

After a relatively short, though intense collaboration between Sigma Conso and Fortino Capital, this was the right moment for both Sigma Conso and Prophix to team up to become a broad suite “Office of CFO” software company, globally serving mid-market customers.     

The rationale of the deal was clear for all stakeholders involved (Sigma Conso, Prophix, Hg and Fortino Capital): 

1. “Office of the CFO “software is a hot market, notably during uncertain periods like Covid, notably the strategic corporate performance management segment.   
2. The geographical complementarity allowing both companies to cross-sell their products globally. 
3. The product complementarity allowing to complete each others’ product suite (both financial consolidation and reporting combined with financial planning and budgeting). 
4. The same customer focus, both focused on mid-market customers, serving >2,200 customers together in North-America, Europe and South-East Asia   
5. Hg is known for its value accretive buy-and-build, hence the Sigma Conso’s shareholders (management) who (partially) rolled over, firmly believed in the future value creation potential upon joining forces. 
6. Strong cultural fit between both companies, immediately acknowledged by management teams in all mutual discussions ahead of the deal.    

Despite the short partnership between Sigma Conso and Fortino Capital of somewhat more than a year, Sigma Conso really transformed during that period: 

1. Board got completed by very senior profiles with international software experience (cfr infra). 
2. Management got reinforced by CFO, VP sales and Head of services. 
3. Acquired its South-East Asian reseller, who was also reselling Prophix. 
4. Increased recurring revenues from € 4.2 million in 2019 to ~€ 8 million end of 2021, while overall revenues increased from € 8.2 million to ~€ 12 million by end of 2021, in a profitable way. 
5. Entered the German market to further claim European market leadership, while planning to also open Nordics soon. 

One of the growth pillars for Sigma Conso during the partnership with Fortino Capital was inorganic growth, hence the acquisition of the reseller in Singapore. Also on the product side, Sigma Conso was very eager to acquire its own financial planning and budgeting tool as it felt in the market it would have a stronger position than only offering financial consolidation and reporting software. For this purpose, Sigma Conso and Fortino spoke with many targets in the market. However the best fit product-wise was seen in Prophix, but that company was just acquired by Hg, and 3-4x larger than Sigma Conso. At the same time, both Prophix and Hg also acknowledged the great fit. Hence, what a priori was a search for add-on product for Sigma Conso, became a strategic discussion where Prophix showed strong interest in buying Sigma Conso.      

Given the great fit, this ended up being a fast exclusive process without any M&A advisor, where the deal execution took less than 3 months over summer 2021.      

The companies immediately integrated the product and commercial organizations to focus on joint value creation from the start after the deal closing, and Sigma Conso’s CEO became Senior Vice President Corporate Development for Prophix Group as part of the Executive Committee.      

Today, Prophix, after the acquisition of Sigma Conso, is a group of > € 40 million revenues, employing >450 FTEs, serving over 2,200 customers with clear aspiration to grow further into a true corporate performance management software leader for mid-market companies, backed by Hg.     

All-in-all, what started as a consolidation service company in 2002, with Dominique Galloy joining in 2006 as CEO and owner who turned Sigma Conso in a leading financial consolidation software vendor in Europe and Asia, with help of Fortino accelerating its success since 2020, ended up into a global partnership, where Sigma Conso is now able to service mid-market customers globally with its leading-edge consolidation offering, as part of a global group offering the full suite of corporate performance management solutions to the mid-market.  

What was the deal rationale?
Prophix was acquired by Hg in February 2021. Prophix is a Canadian software company with focus on financial planning (forward looking) on North-American market, serving 1,600 customers in mid market.      

Sigma Conso was acquired by Fortino Capital in June 2020. Sigma Conso is a Belgian software company with focus on financial consolidation and reporting (backward looking) on European and South-East Asian markets, serving 650 customers in mid market.      

There are three levels of complementarity that drove the deal rationale:   

1. Product complementarity: consolidation & reporting software (backward looking) along with budgeting and planning (forward looking).  
2. Geographics complementarity: Europe + Asia & North-America.  
3. Customer focus: both companies focus on mid-market customers, not the large enterprise customers where many other software vendors are focusing on.    

One additional element that contributed to fast conclusion of the deal was cultural fit.  Both companies and its CEOs had really good fit during the strategic discussions leading up to the deal, giving them the feeling that both strategy and company cultures would really work well together.     

Based on this, all stakeholders involved in the deal felt this was a great match and even though it was early in the journey of Fortino / Sigma Conso, it was considered the right thing to allow Sigma Conso to offer its product suite worldwide, through this partnership with Prophix, and to be part of a company with global leadership aspirations.  

Where lies the value creation?
Since Fortino came on board in June 2020, Sigma Conso drove value creation across many fronts: 

1. Recurring revenues evolved from  €4.2 million in 2019 to € 8 million by end of 2021; overall revenues evolved from € 8 million in 2019 to € 12 million in 2021.   
2. Sigma Conso reinforced its board with Patrick Van Deven (former EMEA head of C3.ai), Edouard Fourcade (former EMEA head of Anaplan) and Jean de Crane d’Heysselaer (CEO Isabel Group). 
3. Sigma Conso professionalized its management, as up till then Dominique as CEO was acting as CEO, VP Sales, CFO and Head of Services combined. Sigma Conso hired a CFO, VP Sales, and internally promoted a Head of Services, within 3 months after the entry of Fortino Capital in June 2020.  
4. Sigma Conso entered the German market at start of 2021 and had plans to open Nordics to increase its European coverage further.   
5. Sigma Conso acquired its reseller in South-East Asia in May 2021, this reseller was already a reseller of both Prophix and Sigma Conso, indicating the great compatibility of offering both products at once as part of the “Office of CFO” suite.   
6. On the product level, Fortino’s team helped the company to set up proper product management and reduce the development cycles from over several months to 6 weeks adopting the agile way of working.   

What is the impact of this deal for the stakeholders?
Given the complementarity of the companies (cfr. supra), the impact for key stakeholders is to be value accretive.    

1. Customers: Prophix and Sigma Conso as a group will have holistic software offering on both historical financial reporting (Sigma Conso suite) and future financial planning and budgeting (Prophix suite).   
2. Employees: as Prophix is mainly active in North America and Sigma Conso in Europe and South-East Asia, the teams will be organized across regions, cross-selling the entire group product suite.   
3. Management: Dominique Galloy, CEO Sigma Conso, joins the Executive Committee of Prophix and will be responsible for Corporate Development worldwide.      

What was particular about the deal process?
The exit process was a 1-to-1 exclusive process, without M&A advisor, where the Hg and Prophix teams worked closely with the Fortino and Sigma Conso teams to close the deal in less than 3 months (over summer from mid-July 2021 up till early October 2021).       

Do the management or entrepreneurs deserve a special mention?
Special mention for Dominique Galloy, who has been the owner and CEO of Sigma Conso since 2006, having bought a majority of the company from Allen White. Allen White is a financial consolidation guru, who set up Sigma Conso to deliver consolidation services to its customers in 2002. Dominique came on board in 2006 and has transformed the company from a service company into a cloud-based software company, serving customers in 27 countries in Europe and Asia. The company is completely bootstrapped and generated profitable growth with ~20-25% growth per year.  

Rivean Capital acquires Trustteam from Ardian Expansion

Facts

Involved firms and advisors buy side:
Legal: Allen & Overy LLP
M&A: Kumulus Partners
Financial: Eight Advisory
Involved firms and advisors target: Eubelius CVBA
Involved firms and advisors sell side: Legal: Linklaters LLP 

Brief description / Deal outline: 

Ardian, a world-leading private investment house, sold its majority stake in Trustteam, a leading IT managed services provider headquartered in Kortrijk, to Rivean Capital. 

Why should this deal win the Award for Best Mid Cap Private Equity Deal?  

The development of Trustteam under Ardian’s wings is a prime example of the added value PE firms can have in the Belgian economy. It deserves the award for Best Mid Cap Private Equity Deal 2022 because it demonstrates how successful PE involvement can support the growth of a promising business into a market-leading enterprise and prepare it for further international expansion through a close and fruitful partnership with the company’s management.   

In 2018, Ardian acquired a majority stake in Trustteam, a provider of IT managed services, specializing in cloud solutions, hardware and networks, software, VoIP and support. Trustteam has two ISO 27001 certified data centers which allow it to meet the most stringent information security requirements.  

The company was established in 2002 and has offices in Belgium (Kortrijk, Wavre, Heusden-Zolder, Antwerp and Nazareth), France (Colmar and Nancy) and Romania (Iași). With now nearly 6,500 customers, Trustteam is a major player in the IT services market in Belgium and France.   

Since Ardian’s investment, Trustteam has rapidly grown both through solid organic growth and targeted M&A, in the framework of a successful buy-and-build strategy. Trustteam and its management, with the backing from Ardian, have successfully completed 6 add-ons in France and Belgium. During Ardian’s holding, Trustteam’s development was significantly accelerated, tripling the revenues of the company from
€ 20 million to € 60 million and turning the local player into an international business with 260 employees and ten offices across three countries.    

In order to assist management with the next stages of international growth for Trustteam, Ardian decided in Q2 2022 to find a new partner for Trustteam. This partner was found in Rivean Capital (formerly known as Gilde Buy Out Partners), a leading European private equity investor in mid-market transactions with operations in the DACH region, Benelux and Italy and managing funds in excess of € 3 billion.    

With Rivean Capital as a new partner, Trustteam is confident that it will be able to continue its ambitious international growth objectives and Ardian is proud to realise its investment by passing the baton to this successor. 

What was the deal rationale? 

Through the sale to Rivean Capital, Ardian is proud to realise a successful investment. By passing the baton to Rivean Capital as a quality partner for Trustteam’s management, Trustteam is set to continue the successful growth trajectory of the group. 

Where lies the value creation? 

Since Ardian’s investment, Trustteam has rapidly grown both through solid organic growth and targeted M&A, in the framework of a successful buy-and-build strategy. Trustteam and its management, with the backing from Ardian, have successfully completed 6 add-ons in France and Belgium.    

During Ardian’s holding, Trustteam’s development was significantly accelerated, tripling the revenues of the company from € 20 million to € 60 million and turning the local player into an international business with 260 employees and ten offices across three countries. 

What is the impact of this deal for the stakeholders?   

The deal positively impacts all of Trustteam’s stakeholders.  

Trustteam’s employees will continue to benefit from a strong and local investor in the form of Rivean. Due to Rivean’s clear focus on international growth and expansion, the employees of Trustteam have a trustworthy partner to assist them in their future story. The growth ambitions of Trustteam and Rivean focus on both strategic and organic growth, which is expected to positively impact employment generation.  

With this new partner, Trustteam will continue to service its customers in an increasingly complex IT environment through offering solutions that fully unburden their customers. 

What was particular about the deal process? 

Notwithstanding uncertain times and volatile markets, this deal was characterised by the eagerness of the parties and the speed of execution. Time between signing and closing was exceptionally short, the transaction being closed only four weeks after signing. 

Do the management or entrepreneurs deserve a special mention?   

Rivean stated: “From the outset, we have been impressed with Trustteam’s track-record of consistent organic growth, its value-creative buy-and-build strategy and its entrepreneurial management team, creating the leading managed service provider for SMEs in Belgium and Northern France. In an increasingly complex IT environment, Trustteam offers an attractive proposition to fully unburden their SME customers. We are delighted to be partnering with Pieter, Stijn and the rest of the management team to further their growth ambitions, both organically and through strategic acquisitions.” 

Straco acquires Incendin from Gimv

Facts

Involved firms and advisors buy side:
Legal: Baker Mckenzie
Financial: PwC
Involved firms and advisors target: see sell side
Involved firms and advisors sell side:
Legal: Linklaters LLP
M&A: Kumulus Partners
Finance & Tax: LDS Advisory
Environmental: Ramboll

Brief description / Deal outline:
Auction sale by Gimv and other shareholders of Incendin, a Belgium-based company specialised in active and passive fire protection solutions, to Straco. 

Why should this deal win the Award for Best Mid Cap Private Equity Deal? 
Erik Mampaey, Managing Partner and Head of Sustainable Cities at Gimv, was quoted: “We are proud that together with management and through an intensive buy-and-build process, we have been able to build Incendin into a market leader with a modern production apparatus and with research and development that focuses on environmentally friendly products. Therefore, this investment clearly illustrates our Building Leading Companies and Sustainable Cities strategy. Today, we see this fine company transitioning into the right hands at Straco for the follow-up story. We wish management and the new shareholder every success.”   

The transformation of Incendin under Gimv’s wings is a prime example of the added value PE firms can bring to the Belgian economy. During Gimv’s tenure, Incendin has been transformed into a market-leading player in active and passive fire protection solutions through an intense buy-and-build process and significant investments in modern production facilities.    

In 2014, Gimv invested in Ecochem, a company active in sustainable, fire-retardant chemistry which was founded by three Flemish entrepreneurs. Five add-on acquisitions were realised in the following years. This has resulted in a group that became a market leader in both fire-fighting (“active”) and fire-retardant (“passive”) chemistry with a whole range of products and applications for the construction and transport sectors and for electronic applications. Besides the investments in bolt-on acquisition, a state-of-the-art production plant was built in Willebroek, next to its production site in Germany. Lastly, together with management, Gimv also invested in research & development, with a strong focus on sustainability and ESG. This led, among other things, to the successful breakthrough technology of FFX, a range of fluorine-free additives for portable fire extinguishers respecting a safe and green environment. These investments allow Incendin to serve its customers in Europe and beyond in an efficient, high-quality and environmentally friendly manner. Incendin recorded a revenue of c. € 65,000,000 in 2021.    

The sales process was launched in January 2022. The process was highly competitive. Ultimately, Incendin was sold to Straco, a Belgium-based investment company of the De Raedt-Verheyden family. Management reinvested alongside Straco.   

Straco has a clear focus to further grow Incendin’s business through international acquisitions to strengthen its European market leadership. In addition, Straco will continue to build on Incendin’s broad portfolio of in-house developed high-tech products thanks to its specialized in-house R&D lab.     

What was the deal rationale?
Straco was excited to invest in Incendin given its potential for additional growth, both through M&A and additional investments in R&D. Its long-term investment horizon is a perfect match with Incendin’s business plan.  

Where lies the value creation?
Under Gimv’s control, Incendin realised an impressive growth story, through an intense buy-and-build process (during which 5 add-on investments were realised), significant investments in a state-of-the-art production site in Willebroek and a strong focus on research and development, leading to, among other things, the successful breakthrough technology of FFX, a range of fluorine-free additives for portable fire extinguishers respecting a safe and green environment.   

What is the impact of this deal for the stakeholders?
The deal positively impacts all of Incendin’s stakeholders. Incendin’s employees will continue to benefit from a strong and local investor in the form of Straco. Due to Straco’s clear focus on the long term, the employees of Incendin have a trustworthy long-term partner to assist them in their future story.  

Through its strong focus on sustainability, Incendin contributes to a better and green environment.  

What was particular about the deal process?
The Incendin sales process was highly competitive. This competitiveness led to the deal being signed and closed within a very short timeframe (three weeks) after submission of the binding offers.  

Do the management or entrepreneurs deserve a special mention?  
N.A. 

Aerospacelab

Facts

Involved firms and advisors buy side: Cresco 
Involved firms and advisors target: N.A.
Involved firms and advisors sell side: N.A. 

Brief description / Deal outline:
The company raised € 40 million through a combination of debt and Series B venture funding in a deal led by Airbus Ventures and Siparex XAnge Venture, putting the company’s pre-money valuation at € 76.23 million. Noshaq, Octave, SRIW Life Sciences, SambrInvest, Miroslaw Klaba, BNP Paribas and BelAero also participated in the round. The funds will be used to assist Aerospacelab “ramp up satellite tv for pc manufacturing capability, deploy a number of constellations to determine intra-daily monitoring of the Earth’s floor and implement geospatial knowledge fusion analytics capabilities”.  

Why should this deal win the Award for Best Venture Capital Deal? 
N.A.  

What was the deal rationale?
Mr Mat Costes, Partner at Airbus Ventures, said: “With its clear and significant potential to positively impact both European and global markets, Aerospacelab sparked our immediate interest and attention. They won our support by demonstrating how they can substantially improve decision-making processes across a robust sequence of varied sectors and are uniquely positioned to provide geospatial intelligence to private companies and governments alike. To the entire Aerospacelab team we offer a warm welcome as the newest members of our worldwide system of entrepreneurs spearheading the advance of our fund’s portfolio companies across the planetary system.”  

Where lies the value creation?
Developer of small satellites and satellite imagery technology designed to collect high-resolution optical data multiple times. The company’s platform provides tools to automate a broad range of tasks ranging from surveying to monitoring, enabling customers to get analysis of the massive data and also optimizing the transformation of the information received.  

What is the impact of this deal for the stakeholders?
N.A.  

What was particular about the deal process?
N.A.  

Do the management or entrepreneurs deserve a special mention? 
N.A.

Collibra

Facts

Involved firms and advisors buy side: Linklaters LLP, Stibbe (CapitalG)
Involved firms and advisors target: Cleary, Gotlieb Steen & Hamilton LLP
Involved firms and advisors sell side: N.A. 

Brief description / Deal outline:
Collibra raised USD 250 million in a series G capital round to hit a valuation of above 5 billion, making it the first Belgian pentacorn. The funding round was led by leading international investors Sequoia Capital Global Equities and Sofina, along with participation from new investor Tiger Global Management and existing investors Battery Ventures, CapitalG, Alphabet’s investment arm, Dawn Capital, Durable Capital Partners LP, ICONIQ Capital and Index Ventures.  

Why should this deal win the Award for Best Venture Capital Deal? 

Motivation 1 

The funding round of Collibra is unique in the Belgian market for many reasons (not only due to its size) and again proves that Collibra is one of the most successful tech companies founded in Belgium.     

Collibra is a Belgian data governance company which was co-founded in 2008 by Felix Van de Maele, the current CEO, while he was still studying at the University of Brussels. Collibra started as a spin-out from the University of Brussels, after which it steadily grew to become the industry leader and reference in the field of data governance. From its operational headquarters in New York City, Collibra delivers an end-to-end data intelligence platform to its customers.   

Since Collibra’s inception in 2008, the demand for data governance solutions has grown exponentially as society in general has become more data driven. Collibra has been able to capitalise on this increase in demand, and today, more than 500 customers (including 7 of the 10 largest pharmaceutical companies, 70% of the largest U.S. banks, and several of the world’s largest retailers) worldwide use its data intelligence cloud platform to find meaning in their data and strengthen their decisions.  

Collibra is unique, as it is the only company in the industry that provides a single, fully integrated cloud-native platform to enable customers to accelerate their digital transformation journey.   

In order to fund its growth, Collibra has attracted nearly USD 600,000,000 from investors since 2008. Investors include some of the most prestigious and leading VC firms in the world such as Sequoia Capital, Index Ventures, Battery Ventures and CapitalG. The backing from these investors led Collibra to a unicorn status in 2019, as the first Belgian company ever.    

Given its long-term investment horizon and it willingness to support fast growing companies, Sofina proved to be the ideal partner for Collibra.  
After having acquired a small stake in Collibra in 2020, the Series G funding round of the company was the ideal moment for Sofina to increase its stake. Together with Sequoia Capital, Sofina became the lead investor of the USD 250 million Series G funding round.  The Series G funding round valued the company at USD 5,25 billion, more than doubling the company’s valuation announced in April 2020. The USD 250 million was the biggest funding round of a Belgian company in 2021 and confirmed Collibra’s status as the Belgian private company with the highest valuation.   

Harold Boël, CEO of Sofina, said: “Collibra is a high-growth, cloud-native organization and one of the most successful tech companies founded in Belgium. The company’s success is testament to the strength of the Belgian tech ecosystem and we are happy to continue our long-term partnership with Collibra. Against a shifting market landscape, Collibra remains highly differentiated with its cloud platform and robust ecosystem, allowing it to expand its market leadership.”   

Motivation 2 

• Through this transaction, Collibra becomes the first Belgian Pentacorn (in 2019, Collibra became the first unicorn following a capital raise).   
• Through this transaction, Collibra will further accelerate its international growth and expand breadth and depth of the ecosystem.   
• Media coverage.  
• Significant deal value. 

What was the deal rationale?
The additional raised capital will be used by Collibra to:   

• Advance Collibra’s platform roadmap: Collibra will continue to enhance its Data Intelligence Cloud, a single system of engagement for data. As a cloud-native SaaS platform, Collibra uses an edge-cloud architecture, open APIs and graph metadata analytics technology to easily connect to modern data sources, business applications, data science and BI tools in one central location.    
• Expand the breadth and depth of the ecosystem: leading technology partners such as AWS and Google Cloud already see Collibra as the partner of choice for data governance, catalog, lineage and privacy solutions and have become increasingly supportive of Collibra Data Quality. Collibra will expand existing partnerships in their ecosystem, including platform and solution providers AWS, Google Cloud, Snowflake, and Tableau.   
• Accelerate Collibra’s global footprint: to support company growth, Collibra will be expanding its presence globally and hiring in key areas including engineering, sales, customer success and product. Collibra expects to double the size of its global workforce by 2023.   

Where lies the value creation?
Since its last funding round in 2020, Collibra has experienced rapid growth and customer traction, accelerating international expansion across key verticals including financial services, government, manufacturing and healthcare internationally helping to drive record performance in 2021. This led to the company’s valuation more than doubling to USD 5,250,000,000.  

What is the impact of this deal for the stakeholders?
The funding round will allow Collibra to expand its platform and continue its mission to change the way organizations use data — with the belief that governed, accessible, and trusted data has the power to change things for good.  

What was particular about the deal process?
As Collibra is currently seeing overwhelming demand for its platform from the investor community, the deal terms were very competitive and the deal needed to be negotiated within a very short timeframe.  

Do the management or entrepreneurs deserve a special mention?  
Management, led by Felix Van De Maele, deserves a special mention as they founded Collibra as a local start-up in Brussels and have grown the business to become the most valuable Belgian unicorn and one of the leading Belgian tech companies and success stories. 

Intigriti

Facts

Involved firms and advisors buy side:
Legal: Latham & Watkins (Octopus Ventures), Jones Day (ETF Partners), CMS DeBacker (EnBW Ventures)
Involved firms and advisors target: Wilson Partners, Jones Day, Latham & Watkins, Luminii Consulting, Deloitte Legal – Lawyers
Involved firms and advisors sell side: N.A. 

Brief description / Deal outline:
Intigriti NV has raised a total of € 21,133,700 in a Series B financing round that was led by Octopus Ventures. Also participating in the round were a.o. EnBW Ventures and Intigriti’s largest shareholder ETF Partners.  

The Series B financing round consisted of: 

• An equity investment by the lead investor and other investors. 
• A buy-out of some existing shares of the founder by a secondary investor.

Why should this deal win the Award for Best Venture Capital Deal? 
Intigriti’s global cybersecurity platform connects organizations with ethical hackers to continuously test and improve their security through bug bounty programs and other crowdsourced techniques. Achieving 650% growth since its initial funding round in 2020, Intigriti has established itself as the European leader and fastest-growing crowdsourced security platform globally. The platform’s dominance in Europe is driven by its focus on the quality of services and high compliance standards, along with the ambition to inspire sustainability and innovation. This approach has caught the interest of new markets, including the US and Asia. Some of the biggest corporate organisations are transitioning their bug bounty to the EU-based platform. 

The Series B financing round will enable Intigriti to further accelerate its rapid detection, reporting and validation of vulnerabilities. Intigriti will also use the funds to grow its headcount to more than 200 employees worldwide, spread across the company’s offices in the UK, Europe, and Singapore. In general, the Series B financing round will allow Intigriti to cement its position as a global leader in crowdsourced security.  

The Series B financing round brought together the existing shareholders of Intigriti and new, outside investors to provide the company with a fresh capital injection. The size of the deal is both a testament to the already impressive track-record of the company as well as the confidence of the management, shareholders and investors in the future of the platform. The buy-out of a part of the shares of the founder further demonstrates that Intigriti has become an entity which no longer depends on the primary control of its incorporator but has become a business that can draw on the (financial) input and expertise of its growing number of investors.  

The digitalization of the economy means that the role of service providers like Intigriti in securing the digital marketplace will only increase over the following years. By bringing together its existing shareholders and new investors in a Series B financing round, the company is fully equipped to finance its envisioned growth over the next years.  

What was the deal rationale?
The rationale of the Series B financing round was securing a new financial investment in Intigriti as well as taking on board new partners with invaluable expertise that will allow Intigriti to further grow and reach the next level of its company life cycle.   

Where lies the value creation?
The Series B financing round will enable Intigriti to further accelerate its rapid detection, reporting and validation of vulnerabilities. Intigriti will also use the funds to grow its headcount worldwide, spread across the company’s offices in the UK, Europe and Singapore. In general, the Series B financing round will allow Intigriti to cement its position as a global leader in crowdsourced security. 

What is the impact of this deal for the stakeholders?
Following the Series B financing round, Intigriti’s stakeholders will engage with a company that has the funds and expertise to tackle the challenges of the coming years and expand its activities, both in scope and scale.  

What was particular about the deal process? 

The Series B financing round combined  

• A capital increase with the issuance of new shares to new (outside) investors
• A capital increase with the issuance of new shares to existing shareholders 
• A partly buy-out of the founder by an existing shareholder (the secondary investor). Among the outside investors, Octopus Apollo VCT PLC acted as the Lead Investor. Octopus Apollo VCT PLC is a Venture Capital Trust (VTC), which refers to a specific type of investment vehicle that operates in the United Kingdom. The VCT is a closed-end fund that was created by the U.K. government in the 1990s to help direct investment into local private businesses. 

The deal process did not only include the coordination and realization of the cash investment and the transfer of the shares of the founder, but also the shaping of the contractual relations that would govern the cooperation between Intigriti and its (existing and new) shareholders (e.g. share transfer restrictions, exit provisions etc.). 

Do the management or entrepreneurs deserve a special mention?
CEO of Intigriti, Stijn Jans, deserves a special mention for his role in the realization of the Series B financing round.