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Home > Region > Canada > Canadian M&A Roundup Dec 01, 2017 – Banco Bilbao Vizcaya Argentaria Chile, Aricent, ReNew Power Ventures, Noralta Lodge

Canadian M&A Roundup Dec 01, 2017 – Banco Bilbao Vizcaya Argentaria Chile, Aricent, ReNew Power Ventures, Noralta Lodge

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

Target: Banco Bilbao Vizcaya Argentaria Chile

  • Industry: Financial Institutions
  • Acquirer: Bank of Nova Scotia
  • Target: BBVA Chile
  • Size: CAD 2.9 billion
  • Consideration: Not Disclosed
  • Sourceof Funds: Not Disclosed
  • Sell Side Advisors: Not Disclosed
  • Buy Side Advisors: Not Disclosed
  • Legal Advisors: Not Disclosed
  • Expected Close: H1 2018

On November 28, 2017, it was announced that Bank of Nova Scotia (TSX:BNS) (“Scotiabank”) had submitted a binding offer to acquire Banco Bilbao Vizcaya Argentina, S.A.’s (“BBVA”) shares in BBVA Chile for CAD 2.9 billion. BBVA owns a 68.19% stake in BBVA Chile, with the Said family owning 31.62%. Under Chilean law, the Said family has the rights to sell their shares at the same valuation to Scotiabank as BBVA.

At deal close, Scotiabank will double its market share in Chile from 7% to 14% – making it the 3rd largest independent bank in the country. This transaction supports Scotiabank’s long term strategy to increase scale within the Chilean banking sector and the Pacific Alliance countries.

BBVA Chile is a diversified bank in the eponymous country, with just under CAD 30 billion in assets and 4000 employees.

The deal was announced hours before Scotiabank’s Q4 results dropped. Market sentiment for the deal was masked by disappointment at Scotiabank’s weak close due to soft revenues. Shares of the bank slid 2.45% on that day to $81.43.

Target: Aricent Inc.

  • Industry: Industrials
  • Acquirer: Altran Technologies S.A. (ENXTPA:ALT)
  • Target: Aricent Inc.
  • Size: EUR 1.7 billion
  • Consideration: 100% Cash
  • Source of Funds: Equity, Debt
  • Sell Side Advisor: J.P. Morgan
  • Buy Side Advisors: Credit Agricole, Goldman Sachs, Morgan Stanley
  • Legal Advisors: Sullivan & Cromwell LLP, Simpson Thatcher & Bartlett LLP
  • Close: Q1 2018

On November 30, 2017, Altran US, a subsidiary of Altran Technologies S.A. (ENXTPA:ALT), entered into a definitive agreement to acquire Aricent Inc. from KKR & Co. L.P. (NYSE:KKR) and others for EUR 1.7 billion. It will be financed in part with a EUR 750 million rights issue in an all cash transaction. The deal provides 10.6x EBITDA pre-synergies and 8.0x post run-rate-synergies. They expect to generate EUR 25 million in EBITDA run rate synergies and another EUR 25 million in delivery and cost synergies within 3 years.

Altran is one of the world’s largest Engineering and R&D (ER&D) service providers. They have a diversified client base hailing from Aerospace, Automotive, Defense, Energy, Finance, and others. Last year they generated EUR 2.12 billion in top line revenue with 30,000 employees.

Aricent is a Californian based integrated engineering and design provider, operating primarily in communications, semiconductor, and software industries.  LTM June 2017 they did USD 687 million with 10,500 employees.

On a pro-forma basis the combined entity will have top line EUR 2.9 billion with an approximate 15% EBITDA margin, generating operating cash at 10% of revenues. The strong cash generation will help them deleverage below an expected 2.5x within two years of deal close. The entity will be one of the largest ER&D company in the world across Europe and America.

Shares in Altran fell 5% from $15.2 to $14.5 as the news broke.

Target: ReNew Power Ventures

  • Industry: Power & Utilities
  • Acquirer: Canada Pension Plan Investment Board
  • Target: ReNew Power Ventures
  • Size: USD 200 million
  • Consideration: 100% Cash
  • Source of Funds: Equity
  • Sell Side Advisors: Not Disclosed
  • Buy Side Advisors: Not Disclosed
  • Legal Advisors: Not Disclosed
  • Close: December 1, 2017

On December 1, 2017, Canada Pension Plan Investment Board (“CPPIB”) acquired an 8.5% stake in ReNew Power Ventures Pvt. Ltd. (“ReNew”) for approximately USD 200 million through convertible preferred shares that can trigger in event of an IPO. CPPIB also bought  6.33% of ReNew’s shares from Asian Development Bank for approximately USD 150 million at a USD 2.37 billion valuation.

ReNew is an independent power producer in India, engaging primarily in solar and wind power. Its clients include the state electricity boards and large industrials in India. This is CPPIB’s largest renewables investment in India this year.

Target: Noralta Lodge Ltd.

  • Industry: Consumer & Retail, Industrials
  • Acquirer: Civeo Corporation
  • Target: Noralta Lodge Ltd.
  • Size: CAD 367 million
  • Consideration: Cash, Equity
  • Source of Funds: Cash, Equity
  • Sell Side Advisor: Sequeira
  • Buy Side Advisor: Lazard
  • Legal Advisors: Dentons Canada LLP, Dentons US LLP, Bennett Jones LLP, Gibson, Dunn & Crutcher LLP
  • Close: November 27, 2017

On November 27, 2017, Civeo Corporation (NYSE:CVEO) (“Civeo”) announced that it had entered into a definitive agreement to acquire Noralta Lodge Ltd. (“Noralta”) for CAD 367 million in consideration. There will be CAD 210 million in cash with 32.8 million Civeo common shares issued to Noralta’s equity holders. At deal close this translates to a 68% fully-diluted economic interest in the combined entity by Civeo’s existing shareholders.

Noralta is an Alberta-based provider of remote accommodations to the Canadian oil sands region with around 8000 rooms across 11 lodges. LTM from August 2017 they did CAD 155 million in income.

Civeo is a workforce accommodations and facility manager to the natural resource industry in Canada, Australia, and the US among others. Headquartered in Texas, they own and operate approximately 24,000 rooms across 19 lodges.

The deal increases LTM operating cash by approximately 75% on a pro forma basis with a leverage reduction from 4.4x to 3.2x on a standalone pro forma basis. Expected annual synergies come in at CAD 10 million by 2019, stemming primarily from operational and corporate efficiencies.

The acquisition will round out Civeo’s service breadth by increasing their geographical coverage as well as their capacity. Noralta also comes with existing contracts worth CAD 130 million with two major oil players in the region. It is also worth to note that Noralta has long standing relationships with the First Nations in the Alberta area through several JV partnerships.

As the news broke, shares in Civeo fell 8% to $1.95 before making a complete recovery back to $2.10 at the week’s end.

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

Mergers & Acquisitions
Typical M&A Process Walkthrough
Types of M&A Auctions
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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