It's been a big week for deals, featuring PE buyouts, cross-border acquisitions, and even transatlantic share purchases, keeping Canada's top law firms busy on multimillion deals aplenty
Deal: KKR takes mdf commerce private
Value: $255 million – All cash deal will give MDF shareholders $5.80 per share, a 58 percent premium on the company’s March 8th TSX close of $3.68.
McCarthy Tétrault is serving as legal counsel to mdf commerce while Stikeman Elliott is assisting the purchaser KKR in a buyout following a series of privatizations of TSX-listed technology companies. Davies and Goodmans are also in this week’s deals roundup as advisors in Montreal-based Plusgrade’s sale of majority shares to a US private equity giant.
mdf commerce inc., a Montreal-based subscription software company, has agreed to a buyout by US investment firm Kohlberg Kravis Roberts & Co. LP (KKR), in a deal valued at $255 million. The transaction follows a series of privatizations of technology companies listed on the Toronto Stock Exchange.
McCarthy Tétrault LLP and Foley & Lardner LLP are serving as Canadian and US legal counsel, respectively, to mdf commerce, while Scotiabank is acting as the exclusive financial advisor. Desjardins is providing an independent fairness opinion to the mdf commerce Board of Directors.
Stikeman Elliott LLP and Dechert LLP are serving as Canadian and US legal counsel, respectively, to KKR.
“We are excited to strategically partner with KKR to accelerate our expansion and scale our industry-leading platform even further,” said mdf commerce President and CEO Luc Filiatreault. “KKR has a long history of successfully investing in market-leading software businesses globally. I am confident that KKR is the ideal partner for mdf commerce.”
“KKR is closely aligned with management’s vision to accelerate technology innovation across the broader mdf commerce platforms,” said KKR Partner John Park. “We look forward to the enormous opportunity ahead for the mdf commerce eProcurement platform as governments increasingly embrace digital solutions.”
The deal is expected to be completed in the second quarter of 2024, subject to regulatory approvals and customary closing conditions.
Plusgrade Inc., a Montreal-based provider of revenue and merchandising solutions in the travel industry, sold a majority interest to US private equity giant General Atlantic in a deal valued at $1 billion.
As part of the agreement, General Atlantic bought out Quebec-based Novacap’s minority stake in Plusgrade, as well as shares owned by Caisse de dépôt et placement du Québec (CDPQ) and other investors.
Davies Ward Phillips & Vineberg LLP served as legal counsel, J.P. Morgan served as lead financial advisor, and Scotiabank served as financial advisor to Plusgrade.
Goodmans LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP served as Canadian and US legal counsel, respectively, to General Atlantic, while Barclays served as financial advisor.
“Ancillary revenue has become a critical driver of financial robustness for travel companies in every sector, and as the global ancillary revenue powerhouse, Plusgrade plays a central role in helping our travel partners create, grow, and enable major new revenue opportunities,” said Plusgrade Founder and CEO Ken Harris. “We are thrilled to welcome General Atlantic as a strategic partner to help us accelerate our mission and vision by leveraging the firm’s deep expertise across travel, software, and technology.”
General Atlantic Managing Director and Head of Consumer Internet and Technology Tanzeen Syed said, “With ancillary revenues and loyalty programs standing as some of the most important drivers of growth in the travel industry today, we believe Plusgrade is strongly positioned to continue capturing the market.”
“CDPQ is proud to reiterate its support for Montréal-based Plusgrade, which has grown significantly since we became a shareholder in 2018,” said CDPQ Executive Vice-President and Head of Québec Kim Thomassin. “Alongside this new and experienced partner, we look forward to pursuing value creation in this leader in the travel industry’s ancillary revenue market, which will benefit our depositors.”
Modine Manufacturing (Canada) Ltd., a subsidiary of Modine Manufacturing Company, has agreed to purchase Scott Springfield MFG Inc., a Calgary-based manufacturer of air handling units (AHU), from Olympic International Agencies Ltd. in a deal valued at approximately $257 million (US$191 million).
Norton Rose Fulbright Canada LLP served as legal counsel and Angle Advisors acted as the financial advisor to Olympic. Borden Ladner Gervais LLP served as legal counsel and Barclays as financial advisor to Modine.
“We are excited to welcome the Scott Springfield team to the Modine family and continue to advance our complete suite of products in the data center area, as well as expand our indoor air quality offerings,” said Modine President and CEO Neil D. Brinker. “The acquisition is right in line with our transformation and will bring Modine a product line and customer base in high-growth markets that fully complement and expand our current reach, including to hyperscale data center operators. Further, the addition of custom air handling unit capabilities demonstrates our continued commitment to focus on innovative, engineered solutions that help us achieve our long-term growth targets. Coming on the heels of our acquisition of Napps Technology last year and the purchase of liquid immersion cooling assets last month, Modine is in a very strong position to provide customers a full range of technology solutions in critical cooling and ventilation applications.”
Canada Pension Plan Investment Board (CPP Investments) has committed to acquire a 17.5 percent interest in NetCo, the most extensive telecoms network in Italy, for up to $2.9 billion (€2.0 billion).
As part of the agreement, CPP Investments will be joining the Optics BidCo investor group, led by Kohlberg Kravis Roberts & Co. L.P. (KKR) and includes the Italian infrastructure fund F2i and the Ministry of Economy and Finance of the Italian Government.
"NetCo will provide critical end-to-end data connectivity services that support the functioning of the Italian economy," said James Bryce, Managing Director, Global Head of Infrastructure, CPP Investments. "Our investment alongside these key partners with a shared long-term vision will help deliver high-quality digital infrastructure across Italy as well as generating long-term risk-adjusted returns for the fund. We are optimistic that NetCo can represent the first of several infrastructure investments in Italy for CPP Investments."
The deal is expected to close by the end of 2024.
Scholastic, a leading global children’s publishing, education, and media company, has signed an agreement to acquire 100 percent of the economic interest and a minority of voting rights in 9 Story Media Group, a Toronto-based creator, producer, and distributor of children's content, for approximately $250 million (US$186 million).
The collaboration builds on a longstanding relationship between Scholastic Entertainment and 9 Story, highlighting successful projects like the animated series of "Clifford the Big Red Dog" and "Eva the Owlet."
“This highly strategic combination, adding 9 Story's industry-leading capabilities with Scholastic's trusted brand and proven ability to create iconic children's series and franchises, has tremendous potential to build deeper connections with young people through our stories, as the pages of our books come to life on screens and through merchandising,” said Scholastic President and CEO Peter Warwick. “At its core, Scholastic's 360° content creation strategy is about engaging children with reading, and we have introduced our stories to generations of kids by reaching them where they are.”
The deal is expected to close in Scholastic's fiscal 2025 first quarter, which begins on June 1, 2024.
Allied Properties Real Estate Investment Trust (Allied) announced its acquisition of an ownership interest in 400 West Georgia Street, Vancouver, and an increased stake in 19 Duncan Street, Toronto.
The deal for 400 West Georgia entails Allied converting a $198 million mezzanine loan into a 90 percent undivided interest based on a $395 million property value. This property, developed by Westbank, features office and retail spaces, and is notably designed to LEED Platinum standards.
For 19 Duncan, Allied will enhance its ownership to 95 percent by converting the remaining $67.5 million of the mezzanine loan into equity and paying Westbank $36.3 million in cash. This transaction values the property at $525.7 million.
Both deals are expected to close in early April of 2024, subject to customary closing conditions.
