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Home > Industry > Energy > Canadian M&A Roundup Oct 20, 2017 – Meituan Dianping, Cenovus Energy, Recurrent Energy

Canadian M&A Roundup Oct 20, 2017 – Meituan Dianping, Cenovus Energy, Recurrent Energy


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

Target: Meituan-Dianping (China Internet Plus Group)

  • Industry: Technology
  • Investors: Syndicate (led by Tencent Holdings Ltd)
  • Target: Meituan Dianping
  • Size: $4 billion
  • Consideration: Not Disclosed
  • Sourceof Funds: Not Disclosed
  • Sell Side Advisors:Not Disclosed
  • Buy Side Advisors: Not Disclosed
  • Legal Advisors: Not Disclosed
  • Expected Close: Oct 19, 2017

On October 19, 2017, a syndicate led by Tencent concluded a Series C funding round for Meituan-Dianping with a stake of $4 billion. This gives the company a valuation of approximately $30 billion.

Meituan-Dianping is a lifestyle e-commerce platform that delivers services through smartphone applications. The platform can be compared to a combination of Groupon, Yelp, and Uber Eats for a spectrum of services ranging from meals, groceries, haircuts, or massages delivered straight to consumers’ doors. They have 280 million users who are served by approximately 5 million local merchants.

Post funding round, Meituan-Dingping is now ranked as the world’s 9th most valuable start-up with an aggressive market share of China’s demand economy. With rising pressure at home from competitors such as Alibaba and Baidu, Tencent and others are boosting their stake in Meituan-Dingping to bankroll faster growth. The company plans to use the money to develop AI and other analytics-driven technology.

The syndicate is led by Tencent and includes names such as The Priceline Group and Canada Pension Plan Investment Board.

Target: Cenovus Energy Inc. (TSX:CVE), Palliser Block Asset

  • Industry: Energy
  • Acquirer: Schlumberger Limited (NYSE:SLB); Torxen Energy
  • Target: Palliser Block located in Alberta
  • Size: CAD $1.3 Billion
  • Consideration: 100% Cash
  • Source of Funds: Not Disclosed
  • Sell Side Advisors: Credit Suisse, Scotiabank
  • Buy Side Advisors: Not Disclosed
  • Legal Advisors: Not Disclosed
  • Expected Close: Q4 2017

On October 19th, 2017, Schlumberger Limited (NYSE:SLB) and Torxen Energy entered into an agreement to acquire the Palliser Block asset from Cenovus Energy Inc. (TSX:CVE) for CAD $1.3 billion in cash. Schlumberger will own the asset while Torxen will be the operators.

The Palliser Block is a segment with ready built infrastructure and 800,000 acres of oil and gas rights. Current production is at 54,000 BOE/d and the property sits adjacent to an existing joint venture project by Schlumberger and Torxen.

This deal is in line with Cenovus’ long-term strategy of selling off non-core assets and using the proceeds to retire debt. Earlier last month, Cenovus sold off their Suffield and Alderson Assets to International Petroleum Corporation for $512 million. The proceeds of that deal also went towards retiring debt.

Target: Recurrent Energy, LLC, 1 MW of Solar Power Plants

  • IndustryPower & Utilities
  • Acquirer: Shenzhen Energy Group Co.
  • Target: 1 MW of Solar Power Plants in California
  • Size: $232 million
  • Consideration: 50% Cash, 50% Debt
  • Source of Funds: Not Disclosed
  • SellSide Advisers: Not Disclosed
  • Buy Side Adviser: Not Disclosed
  • Legal Advisers: Jones Day
  • Expected Close: Not Disclosed

On October 12, 2017, Shenzhen Energy group agreed to buy 3 solar power plants in California from Recurrent Energy. Shenzhen Energy will pay with $116 million from its own balance sheet and $124 million from overseas loans.

Recurrent Energy is the solar plant construction arm of Canadian Solar Inc. (NasdaqGS:CSIQ), an integrated company based in Guelph, Canada. Recurrent develops solar plants and then sells them to long-term buyers upon completion. They operate within North America with headquarters based in San Francisco, USA.

China has been a strong proponent of the push for clean energy. They heavily subsidize solar panel products which has led to a supply glut coupled with a decline in solar product quality. Shenzhen Energy sees the acquisition of these solar plants overseas as a way to diversify into quality controlled power plants. The 3 plants combined have the capacity to produce approximately 1MW of energy annually and have long-term contracts to supply power locally.

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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