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Canadian M&A Roundup Oct 13, 2017 – CeramTec, Enel Green Power

Our previous Canadian Mergers & Acquisitions roundups can be found here. Our previous global M&A roundups can be found here.

Target: CeramTec GmbH

  • Industry: Industrials
  • Acquirer:BC Partners; Ontario Teachers’ Pension Plan Board; Public Sector Pension Investment Board
  • Target:CeramTec GmbH
  • Size: Not Disclosed
  • Consideration:Not Disclosed
  • Sourceof Funds: Not Disclosed
  • Sell Side Advisors:BofA Merrill Lynch, Morgan Stanley
  • Buy Side Advisors: Not Disclosed
  • Legal Advisor: Clifford Chance
  • Expected Close:H1 2018

On October 11, 2017, it was revealed that a consortium led by Funds advised by BC Partners have reached an agreement to acquire CeramTec Group (“CeramTec”) from its current owner, Cinven Partners LLP.

CeramTec is a specialty ceramics maker specializing in healthcare and industrial products. They are known for their BIOLOX ceramic joints used in hip replacement operations. As well, they have a thriving European market share for industrial ceramics. Under Cinven’s 4-year ownership, CeramTec has grown their top line revenues from EUR425 million to EUR538 million with EBITDA margins of 32% and 37% respectively. This deal will help CeramTec strengthen their presence beyond Europe on the global stage.

BC Partners is an international PE firm with EUR18 billion AUM. Their investment strategy targets larger businesses exhibiting defensive growth characteristics in Europe and elsewhere. They are looking to grow CeramTec both organically and through acquisitions.

Target: Enel Green Power S.p.A., 1.7 GW of Renewable Plants

  • Industry: Power & Utilities
  • Acquirer: Caisse de dépôt et placement du Québe, CKD Infraestructura Mexico, S.A. de C.V.
  • Target: Portfolio of 1.7 GW of renewables plants
  • Size: USD $1.35 billion
  • Consideration: 25% Cash, 75% Debt
  • Source of Funds: Not Disclosed
  • Sell Side Advisors: Not Disclosed
  • Buy Side Advisors: Not Disclosed
  • Legal Advisors: Not Disclosed
  • Expected Close: Q4 2017

On October 9th, 2017, Enel Green Power S.p.A. (“EGP”), a subsidiary of Enel S.p.A., announced that they had sold a portfolio of wind and solar assets for USD $1.35 billion to an investment platform backed by Caisse de dépot et placement du Québec (“CDPQ”) and CKD Infraestructura México S.A. de C.V. (“CKD IM”). A 100% valuation done by Enel gives the portfolio an EV of USD $2.6 billion and an equity value of approximately USD $0.4 billion.

Under the agreement, EGP will continue to operate the power plants under their new ownership. This lines up with their BSO model (Build, Sell, and Operate) wherein the company invites investors to buy into a diversified portfolio of projects, built and operated by EGP themselves. This strategy gives EGP the freedom to leverage their development and operating prowess in a continual pursuit of growth opportunities. The deal will also lower Enel Group’s net debt by USD $1.9 billion from a net debt balance of approximately USD $46 billion in H1 2017.

CDPQ (CAD 286.5B AUM) and CKD IM (MXN 17.2B AUM) have previous investments in road and telecommunications infrastructure projects. This transaction represents their first foray into renewable energy. They cite favorable political conditions as one of the motivators for the investment, with the Mexican government seeking to generate 40% of its electricity from renewable sources by 2035.

To better understand our M&A write-ups, please refer to the following:

Mergers & Acquisitions
Cash or Stock Consideration for M&A
Accretion/Dilution Part I: EPS, Earnings Yield & All-Stock Transactions

Accretion/Dilution Part II: Math and Breakeven Premiums

Accretion/Dilution Part III: Using Debt for Acquisitions
Accretion/Dilution Part IV: Synergies & Sources of Funds

Will is an economics and accounting student from UBC. He is currently a corporate finance intern at Dassault Systemes and has previously worked in equity research for Canalyst. Outside of school, he is an alpine ski racer in the winter and a triathlete in the summer.

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