An affiliate of Canadian alternative investment firm Brookfield Asset Management said this week it would acquire Westinghouse Electric Co LLC, the bankrupt nuclear services company owned by Toshiba Corp, for US$4.6 billion ($5.7 billion), Reuters reported. Brookfield Business Partners LP and institutional partners will buy the Pittsburgh-based business using US$1 billion of equity and US$3 billion of long-term debt financing, according to a statement. The deal is expected to close in the third quarter of 2018. Westinghouse filed for bankruptcy last March after two nuclear power plants it had designed and was constructing in the U.S. Southeast had gone billions of dollars over their fixed-cost contracts. Brookfield Business Partners, formed in 2016, is the listed affiliate of Brookfield's private equity group.
Rising equity markets and clarity on U.S. tax reform could set the stage for an acceleration in Canadian mergers and acquisitions this year after a slowdown in 2017, investment bankers told Reuters. Canadian M&A activity slipped 6 percent in 2017 to US$239.7 billion, from US$255.1 billion in the previous year, data from Thomson Reuters showed on Thursday. While uncertainty around the tax regime weighed on deal activity in 2017, bankers expect the recently passed changes to the U.S. tax system to boost the allure of U.S. companies to Canadian firms and funds looking to make acquisitions. With Canadian and U.S. stocks at record highs, bankers also see buoyant equity markets supporting deals. Pension funds are expected to fuel deal activity as they look to invest massive capital pools.
At least three consortia, led by France’s Engie SA, Australia’s Macquarie Group Ltd and the United Arab Emirates’ sovereign wealth fund Mubadala Development Co, delivered proposals for a Brazilian gas pipeline network owned by state oil company Petrobras, sources told Reuters. Proposals to acquire a 90 percent stake in Transportadora Associada de Gás SA, the Petrobras unit known as TAG, which owns 4,500 kilometres of pipelines in northeast Brazil, are expected to range from US$5 billion to up to US$7 billion. Macquarie has partnered with Canada Pension Plan Investment Board and Singapore’s sovereign wealth fund GIC Pte Ltd, among others. Petrobras sold another gas pipeline network in southeast Brazil last year to a group led by Canada’s Brookfield Asset Management for US$5.2 billion.
Rogers Communications Inc, which has said it will keep ownership of the Toronto Blue Jays, could look to leasing, licensing and other financial tools to generate value from the Major League Baseball club, sports deal-makers told Reuters. Rogers’ top executives have said in conversations with investors since October that the Canadian cable TV and wireless company wants to “surface value” from the franchise. Some people interpreted that to mean they were considering selling the team, which Forbes earlier this year valued at US$1.3 billion. Ron Mock, president and CEO of Ontario Teachers’ Pension Plan, last week told BNN the pension fund “may end up looking at” a Blue Jays deal.
Wood pellets producer Pinnacle Renewable Energy Inc, owned by Canadian private equity firm Onex Corp, wants to raise about $175 million (US$136 million) through a Toronto initial public offering, sources familiar with the matter told Reuters this week. A successful deal would make it the second-biggest renewable energy IPO in Canada after TransAlta Renewables Inc raised $221 million in 2013, according to Thomson Reuters data. Onex has hired CIBC as the lead underwriter for the IPO, the sources said. ONCAP, a unit of Canadian buyout firm Onex that focuses on the middle market, acquired a majority stake in Richmond, British Columbia-based Pinnacle in May 2011 for $71 million.
Canada’s market for initial public offerings came roaring back this year from a dismal 2016, due in no small part to new issues backed by private equity and venture capital funds. This year “was a breakthrough year in the IPO market, one of the best of the past decade,” Dean Braunsteiner, national IPO services leader at PwC Canada, told PE Hub Canada. Braunsteiner gives some of the credit to PE and VC funds investing in the wake of the 2007-2009 recession and now on the lookout for liquidity opportunities. This trend, combined with pent-up demand and rising share prices late last year, created a “perfect storm,” he said. Taken together, a dozen Canadian PE- and venture-backed IPOs collected $2.3 billion in 2017.
U.S. venue management company SMG’s leveraged buyout by Canadian private equity firm Onex Corp will be backed by a US$650 million loan package, sources told Reuters. Jefferies, Nomura and Macquarie Group are providing the financing. SMG provides services including facility staffing and training, food and beverage, event booking, management and promotion, financial management and maintenance. Its client roster spans stadiums, arenas, convention centres, theatres and recreational and equestrian facilities. Onex is paying around US$1 billion before fees and expenses for SMG and will contribute approximately US$440 million in equity, one of the sources said.
GGP Inc, one of the largest owners and operators of U.S. shopping centers, has rejected a US$14.8 billion buyout offer from its biggest shareholder, Brookfield Property Partners LP, sources told Reuters. Brookfield Property made a US$23-per-share cash and stock offer last month for the 66 percent of GGP it does not already own. A combination of Chicago-based GGP and Brookfield Property would create one of the world’s largest publicly traded property companies. Brookfield Property is considering a new offer for GGP after a special committee of GGP’s board directors turned down its November 11 offer as inadequate, and negotiations between the two companies are expected to continue, the sources said. The acquisition would create a company with an ownership interest in almost US$100 billion real estate assets globally and annual net operating income of about US$5 billion, according to Brookfield Property.
Nestlé is paying US$2.3 billion to buy Canadian vitamin maker Atrium Innovations, expanding its presence in the consumer healthcare market as it seeks to offset weakness in its traditional packaged foods, Reuters reported. The world’s largest packaged food company is buying Atrium, which is expected to have 2017 sales of US$700 million, from a group of investors led by European private equity firm Permira Funds. Atrium’s largest brand is Garden of Life supplements. Nestlé said the acquisition will become part of Nestlé Health Science and extend its portfolio with probiotics, plant-based protein nutrition, meal replacements and multivitamins. Québec City-based Atrium was acquired in 2014 by a Permira-led consortium. The deal valued the company at $1.1 billion.
Canadian pension funds and private equity investors are lining up to buy German metering company Techem with a multi-billion euro sale expected to launch in early 2018, sources told Reuters. Canadian pension fund Caisse de dépôt et placement du Québec and Ontario Teachers’ Pension Plan have teamed up to bid, while European private equity groups Partners Group and CVC Capital Partners are also interested in the asset, sources said. Australian infrastructure investor Macquarie started preparations to sell the business more than a year ago, but the sale of CVC’s Ista, a larger metering asset, got in ahead. Techem, which supplies energy invoicing and energy management in buildings, could fetch close to US$5 billion.