Dealmakers turned to the markets in 2009
DEAL flow continued to be sluggish throughout 2009 hampered by the lack of credit and low business confidence.
Earlier in the year the accountancy firm Begbies Traynor complained that corporate activity had “ground to a virtual halt” but some people still managed to get deals away.
With debt difficult to come by private equity numbers nose-dived – the value of these deals fell by 68% in the first nine months of the year – and companies turned to the market to raise finance.
The Lancashire telecoms firm Daisy Group made several acquisitions in this way as it embarked on a rapid buy-and-build strategy. The Nelson-based company raised £85m through a share placing after it listed on the Alternative Investment Market (AIM) through a reverse takeover
A few months later it paid some £36m for Redstone plc’s telecommunications division, the trade and assets of Eurotel and AT Communications. More deals are planned as the group sets out its stall as an alternative to BT in the small and medium-sized business sector.
One of the larger transactions was the sale of the Manchester diagnostics specialist DxS to a Dutch group in a multi-million pound deal. Qiagen, a quoted sampling and testing business, paid £58m in cash for DxS with a further £21.4m due in performance-related payments.
The deal rewarded DxS’s management team and its backers, a syndicate led by NVM Private Equity. NVM’s Manchester office has invested some £3m since DxS was established in 2001. It held around 50% as part of a syndicate which included YFM and Hygea. NVM described the deal as a “record exit” giving it a return of 13 times its original investment.
Sports retailer JD Sports Fashion also completed several deals, paying £6.5m for the rugby and sports clothing brand Canterbury of New Zealand and around £7m for the French retailer Chausport.
One of the few significant private equity deals was LDC’s swoop for ANSA Holdings from debt-laden listed company Mavinwood. LDC invested £11.6m, while Yorkshire Bank is provided £10.6m in debt and working capital for the drain management and insurance claims handling firm.
The transport company Stagecoach continued its expansion with the £7m acquisition of Preston Bus in January. But the deal sparked an investigation by the Competition Commission which found that it had reduced competition. The watchdog ruled that Stagecoach must sell the company – undoing one of the first deals of a quiet year.
