WorkWave shifts acquisition focus from technology to market consolidation – CEO

Provided exclusively by Mergermarket, an Acuris Company

WorkWave, a provider of cloud-based field service and fleet management software, seeks acquisitions of smaller players after rounding out its solution set, said President and CEO Chris Sullens.

Holmdel, New Jersey-based WorkWave, which has been majority-owned by Chicago Growth Partners (CGP) since August 2012, has made several acquisitions to add capability and functionality. It now has a comprehensive portfolio of solutions and is looking to gain new customers by acquiring within its field services market, Sullens said.

Founded in 1984, WorkWave caters mainly to small and medium-sized pest control, lawn care, landscaping, HVAC, food and package delivery, e-commerce and janitorial services companies. Its sweet spot in terms of buys is companies that have between USD 5m and USD 25m in revenue, though Sullens noted the company is eyeing a few deals bigger than that.

Roughly 90% of WorkWave’s revenue comes from the US, though it has customers in 50 countries. The company is primarily looking for domestic buys, but is also interested in acquisitions as a way to accelerate foreign expansion in Australia and Europe, Sullens said. Its European headquarters is in Italy, with additional US offices in Boston, Honolulu and St. Louis.

WorkWave had 2016 revenue in the mid-40 millions, compared to USD 36.5m in 2016, according to Sullens. It projects 20%-30% organic growth this year, he added.

The company, known as Marathon Data Systems until July 2015 when it acquired fleet tracking firm Foxtrax GPS, has completed at least six acquisitions since 2010, most recently purchasing GPS and telematics firm GPS Heroes in December.

To-date acquisitions have been funded through cash and some debt, Sullens said. Multiples in the space can vary from 2x-3x revenue to 7x-10x revenue, he added.

Sullens said there are no plans for a CGP exit at this time, though he acknowledged there is a “reasonable likelihood” a sale will be explored within 12-24 months. CGP did not respond to requests for comment.

WorkWave peers include Francisco Partners-backed ClickSoftware, GE Digital-owned [NYSE:GE] ServiceMax and Verizon Communications-owned [NYSE:VZ] Telogis, though they focus more on the enterprise market, according to Sullens. All could be potential acquirers of WorkWave, as could private equity firms looking for a platform, he said, noting that the field service software and transportation and logistics market for SMBs remains highly fragmented.

In terms of recent market activity, Sullens pointed to ServiceTitan, a mobile, cloud-based management platform for home service businesses that announced a USD 80m Iconiq Capital-led Series B funding round in March. In 2015, the company raised USD 18m in a Bessemer Venture Partners-led Series A funding round at a post-money valuation of roughly USD 100m.

Last November, Verizon acquired then-listed company Fleetmatics PLC for USD 2.4bn, while GE Digital bought ServiceMax, a provider of cloud-based field service management solutions, for USD 915m.

WorkWave originally focused on the pest control market. The majority of its growth and expansion came after Sullens was hired in 2008.

The company has close to 8,000 active customers (comprising 80,000 users), of which 2,500 are pest control companies, translating to roughly 30%-40% of the market. It has 250 employees and expects to hire roughly 20-25 more by year’s end, Sullens mentioned.

Corporate advisors for WorkWave include law firm Kirkland & Ellis and accounting firm BDO. Its debt provider is Wells Fargo. ArchPoint Partners represented the business on its sale to CGP.

by Deborah Balshem in Fort Lauderdale

As seen in the mergermarket, an Acuris company, newsletter on 15/08/2017

1-800-Flowers seeks gourmet food buys, exec says

Provided exclusively by Mergermarket, an Acuris Company

1-800-Flowers [NASDAQ: FLWS] continues to seek buys in the gourmet food space to help counteract the seasonal nature of gift-giving, said Karim Motani, director of corporate development and strategy.

The Carle Place, New York-based provider of food and floral items is focused on being a destination for gifts.

But while demand for its flowers spikes around Valentine’s Day and Mother’s Day, and orders for its food items peaks around Thanksgiving Day and Christmas, the company is keen to flatten the seasonality of its business.

“We want to expand our offerings so we are a destination throughout the year,” he told this news service.

Gourmet food companies offering confectionary, nuts, cheeses, popcorn, snacks and wine are on its radar. Those with USD 50m-USD 100m in revenue are in the company’s sweet spot, said Motani. Its largest acquisition came in 2014 when it paid USD 143m for Harry & David, a gourmet fruit basket specialist that had USD 400m in revenue.

The gifting company has a USD 594m market cap and approximately USD 1.2bn in revenue.

About 60% of its revenue is from food and about 40% is from floral, and all of its products are perishable.

A smaller but growing part of its gourmet food business is its wholesale division, which was created to help balance out the inherent seasonality of gift giving. Its wholesale line includes dipped fruits and chocolate-covered almonds, which it supplies to specialty grocers and retailers like Barnes & Noble [NYSE:BKS] and Starbucks [NASDAQ: SBUX].

1-800-Flowers’ food business is vertically integrated: its Cheryl’s cookie business buys all the butter, flour and other ingredients and bakes the cookies in-house, and its Harry & David business grows its own fruit on extensive acreage in Oregon. By contrast, its floral business is asset-light: while 1-800-Flowers markets the products, fulfillment is primarily outsourced.

Gourmet targets

Asked if a company like Austin,Texas-based Personal Wine, an online retailer of customized wine, would make an attractive target, Motani said it was familiar with the business and liked its personalization aspect. The business had USD 4.1m in revenue in 2016, according to a report by this news service.

Things Remembered, currently owned by lenders including KKR and Ares, has attractive personalized products, conceded Motani, but he said its focus on selling in malls — a retail category that is under pressure – is not ideal.

Motani called nuts a “great category” because they are used in several confectionary products, gift baskets, and make sense for its vertically integrated model.

The popcorn category is also experiencing a ton of growth, and snack foods in general are attractive, he said., which is primarily an online seller of snacks based in Cranford, New Jersey, had been working with Deloitte Corporate Finance in May 2015 to explore a possible sale, this news service reported at the time. It had approximately USD 30m in revenue in 2014. The company ended up acquiring Kopper’s Chocolate Specialty Co. in October 2016.

Motani said 1-800-Flowers had also looked at Kopper’s.

The executive said he was familiar with, but pointed out its site focused more on self-consumption, where customers buy nuts for their own snacking, as opposed to gift giving. However, Motani said 1-800-Flowers could always take a strong brand and create a gifting line. “Self-consumption is a big opportunity to smooth out seasonality,” Motani said.

Meanwhile, 1-800-Flowers could also expand its “better-for-you” foods, but Motani noted that most gifts tend to be something one enjoys occasionally. “Our stuff is given as a gift,” he noted. “Indulgence is a big selling point.”

Despite its strong acquisition pipeline, seeking buys in the gourmet food space comes at a time of high valuations and much competition from both strategic and private equity buyers, Motani noted.

Opportunistic divestitures

With 15 brands, Motani said it is opportunistic about divestitures, most recently selling its Melrose Park, Illinois-based Fannie May Confections business for USD 115m, upon an approach from Italy- based Ferrero SpA.

“They made an offer we couldn’t refuse,” Motani said.

Ferrero, which is strong internationally, wanted to increase its presence and its manufacturing abilities in the US, Motani said. Fannie May had 90 retail stores, and Ferrero is a multibillion-dollar chocolate business, well positioned to run this type of operation, he pointed out.

In its 2016 annual report, 1-800-Flowers noted its Fannie May brand had been experiencing lower performance after a warehouse fire in the 2015 fiscal year.

1-800-Flowers’ family of brands include BloomNet, a floral wire service; Harry & David; The Popcorn Factory; Cheryl’s cookies;; Wolferman’s, known for its English muffins;; and Stock Yards, a provider of gourmet steaks and chops.

Asked if Stock Yards was core to the business, Motani said it was a smaller but growing unit due to its premium positioning, and because the products are mostly purchased as gifts.

“It is a core piece of our growing prepared meal offerings alongside those offered by Harry & David. We view this as a growth area and an excellent alternative to meal kits,” Motani said.

The New York company’s competitors in the floral space include FTD Companies [NASDAQ:FTD], according to Motani. FTD has a USD 385m market cap and had USD 1.12bn in 2016 revenue.

Motani said the impact on 1-800-Flowers of Amazon’s [NASDAQ:AMZN] acquisition of Whole Foods Market [NASDAQ:WFM] would be limited near-term. In fact, it could even be seen as an opportunity as it could become a channel for its Harry & David products. “We still need to pay attention — this is monumental for everyone in the industry,” he added.

1-800-Flowers primarily uses its internal team to identify acquisitions, and did not disclose external advisors on its acquisition of Harry & David.

by Heather West in San Francisco

As seen in the mergermarket, an Acuris company, newsletter on 11/08/2017

WearSafe Labs receives buyout interest, welcomes advisory approaches – CEO

Provided exclusively by Mergermarket, an Acuris Company

WearSafe Labs, the Hartford, Connecticut-based wearable technology maker, has engaged in discussions with interested suitors and would consider a buyout in the first quarter of next year, co-founder and CEO David Benoit told this news service.

The privately held company has raised USD 4m to date and is in the process of finalizing a USD 7m Series A round with participation from New York City-area venture capitalists and high-net-worth individuals, he said.

WearSafe Labs expects to finish the year with about USD 5.5m in annual revenue and to reach profitability early next year. Around that time, the company also expects to hit subscriber growth goals that would make it a good time to engage in potential buyout talks, the executive said.

Using a Software-as-a-service (SaaS) business model, WearSafe sells personal safety app that integrates with a wearable button that will send real-time emergency information to a user’s close family or friends. Subscriptions cost USD 5 per month and the button is provided at no cost.

Former Goldman Sachs NYSE:GS] partner Ravi Singh invested USD 3m in WearSafe and joined its board in 2015. The board includes members from the national security community and Fortress Investment Group [NYSE:FIG], Benoit said, adding that the company has leveraged their experience and connections for advisory help.

Nevertheless, the company still welcomes approaches from advisers bringing potential buyers or strategic partners, he said.

WearSafe has 24 employees and continues to make hires. The company is most interested in a deal that could allow it to rapidly and competently scale up in the US and globally, the co-founder said.

While a full strategic buyout would potentially offer WearSafe the greatest scalability, it may also opt for one or more minority equity deals with strategic partners at the beginning of next year, according to the CEO.

Benoit said much of the company’s suitor interest has come from overseas – Israel in particular – and WearSafe believes its technology would find high demand and applicability in South America.

WearSafe recently signed a non-disclosure agreement with a media firm interested in investing in the company and offering preferential marketing terms, but most talks with interested parties have remained informal, he said.

Once activated, the WearSafe app opens an active timeline that sends the user’s current location, medical conditions and a 60-second clip of audio from the minute before the button was pressed.

Using a shareable link, the user’s friends and family can interact with the user and also invite first responders to the timeline to help evaluate the situation and approach the scene.

This flexible suite of services makes it useful for situations ranging from medical emergencies and car accidents to kidnappings and other instances where using a phone might escalate the situation or be impossible, the CEO noted.

The button can be integrated with Android, Apple, Fitbit and Garmin wearable products. The company is now working to integrate its software into home devices such as Amazon’s [NASDAQ:AMZN] Echo, Google [NASDAQ:GOOGL] Home and Microsoft’s [NASDAQ:MSFT] Cortana, he said.

WearSafe sells through its website as well as Best Buy [NYSE:BBY], Costco [NASDAQ:COST] and independent running specialty shops as it is particularly popular among mothers and female runners, he said, adding that the company is also negotiating wholesale agreements with Dick’s Sporting Goods [NYSE:DKS] and other retailers.

Wiggin and Dana serves as WearSafe’s corporate law firm. Simione Macca & Larrow is its outside accountant.

by Nicholas Clayton in New York

As seen in the mergermarket, an Acuris company, newsletter on 10/07/2017

Agrisoma Biosciences taps advisor for capital raise, CEO says

Provided exclusively by Mergermarket, an Acuris Company

Agrisoma Biosciences is close to completing a CAD 35m (USD 28m) Series C capital raise alongside AltaCorp Capital, said Steven Fabijanski, CEO.

Norton Rose is legal counsel for the company, he said. He added that several of Agrisoma’s existing investors will participate in the round, declining to elaborate.

According to news reports, the Gatineau, Quebec-based company raised USD 15.4m via a Series B round in April, and USD 8m in a Series A round in 2014, both involving Cycle Capital Management and BDC Venture Capital. In April 2015, the company’s management acquired a 22% stake in the business.

Agrisoma created the oilseed variety brassica carinata. The oilseed provides biofuel needs for the aviation industry and non-edible oil for low-carbon biofuels and animal feed protein.

“We just started on our hockey stick of revenue. Larger and larger acres are coming on board for the crop,” said Fabijanski, who declined to disclose the revenue.

The company is raising both debt and equity because its crop requires a lot of working capital, he added.

Agrisoma is already receiving acquisition interest, both from strategics and financial investors, said Fabijanski. Its eventual exit strategy is to be taken out by a large agricultural player such as Archer-Daniels Midland [NYSE:ADM] or Cargill or a seed company such as Monsanto [NYSE:MON] or DuPont [NYSE:DD], he said. An IPO is another possibility, he added, with timing depending on market conditions.

He maintained, however, that Agrisoma has the potential to be profitable continuing as a standalone entity, adding that it expects profitability within two years or less.

The company has been generating revenue for several years. It started out in 2001 as a gene mapping company. Fabijanski, who had a background in the canola industry, joined as CEO in 2007 and the company decided to apply the gene mapping technology to oilseed crops, particularly for biofuels. Brassica carinata is similar to canola but it contains more industrial oil than food oil. The oil easily converts to diesel and jet fuel and can grow where food crops can’t, such as regions with harsh frosts.

Since 2012, the company has converted the grain into diesel and bio jet fuel. “That’s when we started to really take off – pardon the pun,” said the CEO.

Agrisoma worked with the Canadian Aerospace Institute to enable the first 100% bio jet flight in late 2012. The aircraft flew without petroleum fuel, allowing for better fuel economy and lower emissions. Soon after, Agrisoma started growing the crop commercially in Canada. Since 2014, it has been selling its seed to farmers in the Southeast US because carinata can be grown there in winter, on the same fields used for agricultural crops in the warmer months.

“It’s a true Canadian crop – it loves Florida in winter,” Fabijanski quipped. The company, in turn, purchases the grain from the farmers to produce biofuel. At the same time, carinata enriches the soil for the farmers’ food crops.

Agrisoma’s technology is “very disruptive” and has the ability to double agricultural productivity, said the CEO. The seeds have been used in crop rotation programs with soy, peanuts, corn, wheat, barley and cotton. The company’s goal is to recruit enough growers to cover 15,000 to 25,000 acres in the Southeast US in 2017.

Fabijanski views the Southeast US as a proxy for South America and is looking to expand in that region. Farmers in South America are looking for a winter crop to protect the soil from erosion. This month, the company announced a long-term supply agreement with Helsinki biorefinery giant UPM – The Biofore Company, under which the two companies will grow carinata oilseed crops with third-party farmers in Uruguay and Brazil. UPM was producing biofuel from forestry waste in Finland and was looking for new raw materials, he said.

In the near term, Agrisoma’s goal is to grow its production volumes, find more partnerships in the biofuel industry and expand further into Europe, where there is a need for additional protein for dairy and meat production as well as biofuels. “We have a series of partners we’ll announce in the coming months,” he said.

Agrisoma is only now beginning to talk about its commercial impact on the agricultural community, the CEO said. Carinata produced under these “second cropping” procedures provides finished fuels with a greenhouse gas reduction of more than 75% over fossil fuels. Agrisoma believes that on a broader scale, reductions of more than 100% are possible, providing for “carbon negative” fuels that are price competitive with fossil fuels.

by Marlene Givant Star

As seen in the mergermarket, an Acuris company, newsletter on 27/07/2017

PennEnergy Resources nearing decision on sale versus IPO, president says

Provided exclusively by Mergermarket, an Acuris Company

PennEnergy Resources, a private equity-backed upstream oil and gas company, expects to make decisions regarding potential monetization strategies in the “not too distant future” and is talking to advisors, said Greg Muse, president.

The Pittsburgh-based company was founded in 2011 by Muse and Chairman & CEO Richard D. Weber. The company received an initial USD 300m equity commitment from EnCap but saw that commitment increased to USD 532m with the additional backing of Wells Fargo Energy Capital. PennEnergy also has USD 250m in borrowing capacity, Muse said.

PennEnergy is focused on developing natural gas acreage in southwest Pennsylvania. It has achieved most of its goals with respect to securing and proving up acreage and is now looking towards potential exit options, Muse said. Those options include a public offering, joint venture or sale, he said. The company expects to begin making decisions regarding those efforts in the “not too distant future,” he said.

PennEnergy has been talking to potential advisors and plans to continue talking to them moving forward, Muse said.

It has proven reserves “well north” of 1.4 trillion cubic feet equivalent (Tcfe), said Muse. The company holds 112,000 “net effective” acres in southwest Pennsylvania in Butler, Beaver and Armstrong counties, according to a company presentation. The actual land area is around 80,000 net acres but the Beaver County acreage—34,300 net acres—is prospective for both the Marcellus and Upper Devonian formations, doubling the net effective acres in that area, the presentation showed. Total reserve potential is 13.5 Tcfe.

Current production is 135 MMcfe/day but the company expects to exit 2017 with production of more than 200 MMcfepd, he said. The company currently has one rig operating and is looking at adding further rigs, Muse said.

The company has established and proven up a stand-alone position in southwest Pennsylvania, said Muse. PennEnergy was purpose-built to be a stand-alone entity to provide a wide range of exit strategies, Muse said. The company could attract new entrants to the Marcellus or existing basin operators, he said. Special purpose acquisition company (SPAC) buyers are also a possibility, said Muse.

In April, Natural Gas Partners-backed Vantage Energy Acquisition [NASDAQ:VEACU] raised USD 480m and is led by the former management of Marcellus-focused Vantage Energy I and Vantage Energy II. On June 28, Osprey Energy Acquisition Corp. filed an S-1 to undertake a USD 250m public offering. The company is backed by former executives of Marcellus-focused Atlas Energy and Atlas Pipeline, where Muse and co-founder Richard Weber were previously executives.

Current offset operators include ExxonMobil [NSYE: XOM]’s XTO Energy and Rex Energy [Nasdaq: REXX], he said. PennEnergy could make an attractive addition to either player, said Muse. However, it is not clear whether XTO Energy has the appetite to expand in the Marcellus and currently Rex Energy is working through some financial challenges, he said. In April 2016, Moody’s downgraded Rex Energy’s debt rating and assigned a negative outlook reflecting its “continued liquidity stress and the risk of default” and withdrew its ratings altogether in late 2016.

Recent consolidation in the Marcellus has been driven by a desire for large, contiguous acreage enabling operators to drill longer laterals, Muse said. He pointed to Rice Energy’s USD 2.7bn acquisition of Vantage Energy I and Vantage Energy II in September 2016, and the recently announced USD 6.57bn bid by EQT [NSYE: EQT] for Rice Energy [NYSE: RICE]. PennEnergy’s stand-alone position makes such lateral-driven consolidation less likely, he said.

PennEnergy owns a midstream subsidiary called Pine Run Midstream that is constructing a dry gas gathering system that serves a portion of the company’s production and represents a USD 75m investment through 2018, he said.

The company previously held a minority stake in wet gas midstream assets in Beaver County operated by EnCap Flatrock-backed Cardinal Midstream II, said Muse. In March, Energy Transfer Partners [NYSE: ETP] acquired the assets, and the sale generated enough cash for PennEnergy to retire its existing debt and change over to conventional borrowing facilities, he said.

by Mark Druskoff in Houston

As seen in the mergermarket, an Acuris company, newsletter on 12/07/2017

Ports America suitor Yildirim issues mandate to sell CMA CGM stake; seeks financial partner – report

Provided exclusively by Mergermarket, an Acuris Company

Yildirim Group, the Turkish conglomerate active in mine and port management, has mandated China Citic Bank to sell its stake in the French CMA CGM to rise funds to acquire the New Jersey-based terminal operator Ports America, a newswire report said.

According to Bloomberg, which cited Yildirim chairman Yuksei Yildirim, the Istanbul-based company is in exclusive talks with Ports of America owner Oaktree Capital, which holds the company through its PE unit Highstar Capital. The exclusivity agreement expires in July and Yildirim hopes to close a deal by year-end, the item said.

Yildirim has USD 1.7bn to finance an offer, but is seeking a financial partner for the transaction, the report said.

Yildirin’s stake in CMA CGM, acquired in 2010 and 2011 for USD 600m, is currently worth USD 2.5bn-USD 3bn, according to the report.

As seen in the mergermarket, an Acuris company, newsletter on 06/07/2017

WebMD aiming to collect final bids, sources say

Provided exclusively by Mergermarket, an Acuris company

WebMD Health [NASDAQ:WBMD] is asking suitors to submit final bids by mid-July, two sources briefed on the matter said.

Silver Lake is among the financial sponsors that has been pursuing the New York-based online health information service, these sources said. One of the sources said the sale process, which initially drew robust interest from private equity firms, has seen the interest dwindle.

This news service previously reported that WebMD management presentations commenced in early June. The Blackstone Group [NYSE:BX], Bain Capital, The Carlyle Group, Thoma Bravo, TPG and Vista Equity Partners along with Silver Lake were identified as sponsors eyeing WebMD. IAC [NASDAQ:IAC], a New York-based media and internet company, was also identified as a possible suitor.

Some financial sponsors have “stayed in” the process but do not appear to be doing a lot of work, one of the sources briefed said. The level of strategic interest could not be learned.

Financing packages for WebMD are expected to carry high leverage, the second source said. This news service previously reported that some banks have pitched financing over 7x EBITDA. Leverage at the start of the process was pegged in the 6x to 6.25x EBITDA range, the same report said. WebMD projects 2017 EBITDA will be between USD 233m and USD 243m.

The first source briefed said a concern for buyers has been that WebMD, which operates separate services for consumers and doctors, had put out lower revenue growth expectations in recent years. The company does enjoy a high-level of name recognition for its web portals.

WebMD’s physician business, Medscape, is the most attractive asset at the company, as reported. Around 80% of WebMD’s USD 705m in 2016 revenue comes from advertising. The physician site accounts for 60% of the advertising revenue.

Another ongoing concern in the auction is that WebMD has explored a sale multiple times in the past without success and there has been some skepticism about the company’s willingness to transact, as reported. The second source noted, though, that the auction, this time, has advanced farther than past sale attempts.

WebMD announced plans in February to explore strategic alternatives with JPMorgan and Shearman & Sterling advising.

Activist Blue Harbour Group filed a 13-D in March disclosing an almost 9% stake in WebMD and said it had held discussions with the company.

WebMD did not return request for comment. Silver Lake declined comment.

by Bhavna Kaul and Jay Antenen

As seen in the mergermarket, an Acuris company, newsletter on 10/7/17

Pyramid Healthcare likely to explore sale in late 2018 – source

Provided exclusively by Mergermarket

Pyramid Healthcare, a Duncansville, Pennsylvania-based behavioral health provider, should be positioned to explore a sale towards the end of next year, said a source familiar with the matter.

Backed by Clearview Capital since 2011, the addiction treatment company expects have roughly USD 150m in revenue and EBITDA close to 15% at the time of its sale, according to the source.

Multiples in the behavioral health space can reach upwards of 10x-12x EBITDA, especially for companies such as Pyramid, whose revenue stream comes entirely from in-network and government providers, which is more stable and reliable, the source added.

Despite a significant amount of inbound sale interest from financial and strategic buyers, the source explained that Pyramid is implementing a new electronic medical record (EMR) system and is also in the process of expanding several facilities, and waiting to bear fruit on those initiatives before exiting.

Pyramid provides treatment for adults and teens suffering from addiction or substance abuse, as well as individuals with mental health disorders. Founded in 1999, the company has at least 26 facilities located throughout Pennsylvania, according to its website. It more recently branched out via acquisitions into North Carolina and New Jersey.

The source said Pyramid expects to close a small acquisition later this week.

Addiction treatment centers are among the most highly coveted sub-sectors in the overall behavioral health space, according to a report earlier this month by Mergermarket, which pegged Pyramid as a likely near-term sale target.

The main strategic acquirers in the behavioral health space, as noted in that report, are Acadia Healthcare Company [NASDAQ:ACHC], Universal Health Services [NYSE:UHS] and AAC Holdings [NYSE:AAC], while PE-backed consolidators include Kohlberg & Company-backed Alita Care, Audax Group-backed Meridian Behavioral Health, Goldman Sachs-backed Advanced Recovery Systems and Centre Partners-backed Bradford Health Services.

Pyramid did not return request for comment. Clearview declined to comment for this report.

by Deborah Balshem in Fort Lauderdale

As seen in the mergermarket newsletter on 27/06/2017

PQ Group Holdings files for USD 100m IPO

Provided exclusively by Mergermarket

PQ Group Holdings Inc., a Malvern, Pennsylvania-based provider of specialty materials and chemicals, has filed an S-1 with the US Securities and Exchange Commission with a current placeholder of USD 100m.

Morgan Stanley & Co. and Goldman Sachs & Co. are the book-runners for the offering. Citigroup Global Markets, Credit Suisse Securities, JP Morgan Securities, Jefferies, Deutsche Bank Securities and KeyBanc Capital Markets are the underwriters. PQ has enlisted the legal services of Ropes & Gray LLP. The underwriters are being represented by Latham & Watkins LLP.

The company plans to use the proceeds of the offering for working capital and other general corporate purposes.

PQ lists CCMP Capital Investors III and INEOS investments Partnership as its principle stakeholders.

The proposed maximum aggregate offering of USD 100m currently listed in the prospectus is subject to change pending the company’s roadshow and market conditions.

Link to SEC filing.

As seen in the mergermarket newsletter on 10/06/2017

Etsy in review with Goldman – sources

Provided exclusively by Mergermarket

Etsy (NASDAQ: ETSY) is working with Goldman Sachs on reviewing its strategic and operational plans, said two sources following the situation.

The review is at an early stage as new management is still “figuring out what makes sense”, said a person familiar with the situation.

The New York-based online marketplace worked with Goldman and Morgan Stanley on a successful IPO in April 2015. Shares were priced at USD 16 and opened at USD 31 in market debut.

But Etsy’s honeymoon with investors quickly ended. In early May, Black & White Capital urged the company to find ways to maximize value, including exploring a sale, as its share price had tumbled more than 30% since its IPO amid a challenging operating environment. The company trades at USD 13.26 in today’s session, for a market cap of USD 1.55bn.

Internet retailing is a crowded space and stocks are suffering, an industry advisor said.

Besides poor price performance, the insurgent complained about Etsy’s growth slowdown, as well as operational and corporate governance issues.

This news service reported that Etsy was at risk of being targeted by an activist in December 2016 as it was underperforming.

The company quickly appointed a new CEO, Director Josh Silverman, in response to the activist threat, completing a senior management reshuffle initiated in April with the hire of new CFO Rachel Glaser.

Among other roles, Silverman co-founded Evite, held various executive roles at eBay [NASDAQ:EBAY], and was the CEO of Skype and, according to Etsy’s website. The board of six members is chaired by lead independent director Fred Wilson, founder of Union Square Ventures.

But the move failed to prevent other agitators from popping up. Private equity firm TPG Group Holding and Dragoneer Investment Group said in separate 13D filings on 15 May they were forming a group, collectively holding 8% of the shares, to engage in discussions with the company. Etsy responded by launching the review on that same day.

Etsy received pitches from other banks to successfully fend off the activists, a second sector advisor said. But the company appears to be well covered on defense advisory, the person said.

TPG’s investment was surprising, a third sector advisor said. Market participants have been wondering if it could be a first step in potentially making a bid in what would be an unusual move for private equity, he noted.

In announcing the review, Silverman said Etsy would prudently invest in higher-return areas, as well as tapping opportunities to scale its marketplace business model and driving efficiencies, while seeking operational excellence and focused execution.

Dragoneer has worked with TPG before, including in a funding round for home-rental site Airbnb.

Etsy declined to comment. Goldman Sachs did not respond to a request for comment.

by David Carnevali

As seen in the mergermarket newsletter on 12/06/2017