Q-News

March 2010

M&A News - February 2010

Posted in M&A News

In February, there were eight acquisitions of private companies that involved a private Canadian entity on at least one end of the transaction. This total represents an increase from the four transactions we reported in February 2009, but slightly lower than the 11 transactions reported last month. None of the buyers came from the private equity sector - the headlines were dominated by strategic buyers. Four of the eight deals were cross-border transactions and only one of these international deals involved a Canadian buyer. This means that in total there were seven Canadian companies acquired in February. Three of the Canadian companies that were bought are in the technology sector while the other four consisted of a biotech R&D shop, a holding company with properties in online media, a small regional telecom company, and a chocolate retailer. Of the three foreign companies making Canadian acquisitions, two are based in California and one is headquartered in India.


Canadian M&A Transactions:

In an acquisition involving two Toronto-based businesses, directory publisher Yellow Pages acquired Clear Sky Media, a holding company whose assets include online properties RedFlagDeals.com and PriceCanada.com.

Quebec-based chocolate producer Aliments Nutriart acquired Laura Secord and its 128 retail locations from an investor group led by EG Capital Group LLC (NY) and Gordon Brothers Group (MA) for approximately $20 million. The investor group had initially acquired the business back in 2004 for $27.6 million; at that time Laura Secord was a larger operation consisting of 160 retail locations.

DiaMedica (TSX-V: DMA), a Winnipeg-based biotechnology company engaged in developing treatments for type-II diabetes, enlarged its patent portfolio and expanded into neurological as well as other indications by acquiring Winnipeg-based Sanomune in a deal valued at US$7.94 million.

Modern Digital Communications, a recently restructured telecommunications company providing voice, fax, data, web hosting and co-location services to clients in B.C., has been acquired by Phonetime (TSX: PHD), a diversified long distance telecom company headquarter in Mississauga. The cash and share deal values Modern Digital Communications at roughly $267,500. This is a seemingly favourable valuation from the acquirer’s perspective considering that it intends to realize substantial future tax savings by virtue of Modern Digital’s tax loss pool, which totals approximately $4.5 million.


Cross Border M&A:

Exar Corporation, a California-based fabless semiconductor company, acquired Neterion, an Ottawa-based firm that operates in the server virtualization industry, for $11 million.

Zylog Systems, a consulting and engineering firm based in India, acquired Ottawa-based Brainhunter, which provides staffing and HR solutions to IT companies, government and engineering clients. The acquisition was carried out by way of a CCAA bankruptcy auction in which Zylog Systems emerged as Brainhunter’s new owner through its bid of $35 million.

Calisolar, a California-based designer and manufacturer of high-performance solar wafers, acquired 6N silicon, an Ontario-based silicon supplier, in a share swap transaction between the two companies. As part of the transaction, $22.5 million was raised from existing Calisolar and 6N Silicon investors.

Vertical Scope, a Toronto-based company that publishes websites and print magazines for the automotive, sports and technology enthusiasts, acquired Minneapolis-based Off-Road.com. Off-Road.com is a web portal offering discussion forums and blogs for off-road enthusiasts. The Company was acquired from Advanstar Communications (CA). The financial details of the sale were not disclosed.

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