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Canadian M&A Roundup Jun 2, 2017 – CQ Energy, iNova Pharmaceuticals

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Target: CQ Energy Canada Partnership

  • Industry: Energy
  • Acquirers: MIE Holdings Corporation, The Can-China Global Resource Fund and Mercuria
  • Target: CQ Energy Canada Partnership
  • Size: $722 million
  • Consideration: 100% Cash
  • Source of Funds: Internal Cash, Debt and Equity
  • Sell Side Advisors: TD Securities and J.P. Morgan
  • Buy Side Advisor: Not Disclosed
  • Legal Advisor: Stikeman Elliott LLP
  • Expected Close: Q3 or Q4 2017

On June 9, 2017, a consortium comprising of MIE Holdings Corporation, The Can-China Global Resource Fund and Mercuria agreed to purchase a 60% stake in The CQ Energy Canada Partnership from Centrica plc for $722 million. The deal represents an implied EV/2P multiple of $2.10/boe.

The deal will be funded using a combination of internal cash, a $250 million Senior Secured Revolving Credit Facility, $170 million in Convertible Preferred Shares from The Can China Global Resource Fund, $34 million in Convertible Preferred Shares from Mercuria, and $296 million in Common Shares from MIE Holdings.

The CQ Energy Canada Partnership owns a diverse Canadian producing, resource and infrastructure asset portfolio located throughout the Western Canadian Sedimentary and Williston basins with net processing capacity of 630 MMcefe/d.

The sale comes as Centrica plc wants to fully exit the Canadian oil and gas market to focus solely on European assets. Many foreign oil and gas companies continue to divest from the Canadian market due to continuing uncertainty and unfavourable regulatory conditions.

The consortium group was drawn to Canada’s vast oil and natural gas resources and wants to rebuild its asset portfolio through low decline, long life asset base products and infrastructure.

The consortium group wants to widen its global footprint and develop a more balanced portfolio and believes The CQ Energy Canada Partnership has vast acreage of undeveloped land that can provide potential for growth.

Target: iNova Pharmaceuticals (owned by Valeant Pharmaceuticals)

  • Industry: Pharmaceuticals
  • Acquirer: Pacific Equity Partners and The Carlyle Group
  • Target: iNova Pharmaceuticals
  • Size: US$930 million
  • Consideration: 100% Cash
  • Source of Funds: Equity
  • Sell Side Advisor: Goldman Sachs
  • Buy Side Advisors: Allier Capital, Credit Suisse, Bank of America Merrill Lynch, UBS, Macquarie Bank
  • Legal Advisors: Baker McKenzie, Gilbert + Tobin
  • Expected Close: Q3 or Q4 2017

Valeant Pharmaceuticals International agreed to sell iNova Pharmaceuticals to a company advised and managed by Pacific Equity Partners and The Carlyle Group for US$930 million on June 8, 2017. This represents an implied EV/EBITDA of 7.5x.

The Carlyle Group will use equity from Carlyle Asia Partners IV to fund its portion of the transaction.

iNova has a diversified portfolio of prescription and over-the-counter products with operations in more than 15 countries around the world. It holds a leading market position in Australia and South Africa and an established platform in Asia.

The Carlyle Group has experience in the global healthcare sector and sees growth opportunities in new markets through iNova. Pacific Equity Partners intends to build on iNova’s diversified healthcare platform through capital expenditures in R&D and potential acquisition of additional brands.

Valeant’s rationale behind the deal was to raise funds to permanently a repay term loan debt under its Senior Secured Credit Facility as part of an effort to strength its balance sheet and simplify operations. Valeant currently has a debt load of US$28.5 billion and CEO Joseph Papa wants to bring that number down in the range of US$15 billion to US$20 billion.

Sara
Sara
Sara Troka is a first year HBA student at Ivey Business School. Sara will be joining a bank in NYC next summer. She was involved in the York Finance Club as VP Marketing and the York University Student Investment Fund as a Junior Analyst. Outside of finance, Sara enjoys photography and fashion. She is an avid traveler who enjoys exploring historic cities and beaches across Europe.
https://www.linkedin.com/in/saratroka/

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