www.smithcooper.co.uk

Deal
DISPATCH
ISSUE 22
MEL MORRIS
BECOMES SOLE
OWNER OF DCFC
Smith Cooper advise on
the deal
DEALS
A collection of our latest
transactions
www.smithcooper.co.uk
1
Deal Dispatch | Issue 22
WELCOME
TO
ISSUE 22
WELCOME
“It could be considered serendipitous or strategic (perhaps both) to be writing
my first introduction to Deal Dispatch at such a buoyant time for M&A across
the Midlands. Since establishing the Birmingham Corporate Finance practice I
have observed deal volumes increase across the Midlands with the professional
community expressing how busy it has become. This increase is driven by market
factors, mainly the ongoing stability of the economy combined with the gradual
easing of liquidity pressures – in short the banks are lending again, are keen to
lend, and this is across all transaction sizes.
The consequence is that I can say with confidence that we are seeing improved
transaction values as the increased available capital chases the deals and
encourages more vendors to sell. This is further illustrated by mid-market
private equity having to chase deals and be more creative in how it approaches a
new investment. Not only is private equity competing on price but they are now
being ‘fleet of foot’ on management terms and due diligence to make sure they
are ahead of the competition. This behaviour is more akin to large private equity
than mid-market but exemplifies a shift change in the market that I have never
previously observed.
Fragility in the economy still remains as the spectre of China looms over the
global market … as yet I am not worried! My view is deal activity over the next
12 months will be high and is likely to return to pre-2008 levels – representing a
significant step change in activity over recent years. This is an exciting period
to be a M&A professional and I am delighted to have joined Smith Cooper at this
time – it was definitely strategic and perhaps fortune favours the brave.”
Darren Hodson,
Corporate Finance Partner
IN THIS ISSUE
3
Derby County chairman Mel Morris becomes sole owner of club
4
Two packaging deals in the bag
4
Starbucks consultancy
5
Say “cheese” - orthodontic deal
5
Frank Key continue to build on expansion strategy
6
Social enterprise
7
Hilco acquires leading jewellery retailer
8
Contact us
2
Deal Dispatch | Issue 22
DERBY COUNTY
CHAIRMAN MEL
MORRIS BECOMES
SOLE OWNER OF
CLUB
Derby County Football Club is
now under the sole ownership
of Chairman Mel Morris after
he bought the club from North
American Derby Partners LP for
an undisclosed sum.
Andrew Delve, of Smith Cooper,
who has acted for Mel Morris for
over 20 years and acted on all of his
recent investments and sales of Prevx
and uDate commented: “Mel is a
businessman of the highest calibre and
his purchase of Derby County brings
For the purchase of Derby County FC, together his passion for both business
Mel Morris turned to the advice of and football, the result of which can
Smith Cooper and Corporate Lawyers, only be a good thing for the Club, fans
and businesses of Derby.
Geldards.
Life-long Derby fan Mel Morris, a local
businessman recognised as one of the
UK’s top serial Tech entrepreneurs,
who bought a 22 percent stake in the
Club in 2014 has now become the sole
owner.
The acquisition of Derby County
follows Morris’ recent investments in
BriefYourMarket.com,
Technology
Merchant Bank and Restoration
Partners Limited.
Morris added: “Whilst I firmly believe
that the club’s ownership is very much
a tertiary concern to most fans, I hope
together we can help steer this club
back into a sustainable place in the
Premier League.
“I’d like to thank Smith Cooper
and Geldards for the advice I
received throughout the acquisition
process. The expert advice, project
management, and leadership they
I have worked with Mel on various provided throughout this process was
investments and acquisitions over invaluable, allowing for the seamless
the past 20 years, but this transaction transition in the running of the club.”
has carried additional excitement due
to both its local significance, my own No changes are planned in the club’s
affection for Derby County and Smith executive team who will continue to
Cooper’s longstanding relationship be managed by Sam Rush as Chief
and sponsorship of the Club.”
Executive Officer. A new board of
directors is set to be announced.
Debra Martin, corporate partner at
Geldards, led the firm’s legal advice to
Mr Morris on the takeover.
3
Deal Dispatch | Issue 22
TWO PACKAGING DEALS IN THE
BAG
Smith Cooper’s Nottingham CF
team wrapped up two deals in
the same sector on consecutive
July days. This brings the firms
total to 12 deals so far this
year, building on our record
performance in 2014.
The July completions were in the
flexible packaging sector, a sector in
which the firm has deep experience
and many long-standing connections.
The first created a major new force in
the Midlands, supplying innovative
packing solutions for the multiple
retail chains as well as other sectors,
the second a strategic diversification
to add new capabilities to an already
substantial
and
fast-growing
packaging group.
The packaging market as a whole
has seen a real surge in M&A since
mid-2014, with larger cross-border
activity now filtering down to the UK
mid-market. Notable deals include
ESNT International’s acquisition of
Clondalkin for £286m and Amcor’s
three deals in rapid succession since
December 2014 for a total value of
$56m.
Multiples also appear to be on the
rise, now being commonly in the
range 8-9 (EBITDA) for larger deals,
positively impacting on mid-market
pricing which is now above 6 times for
attractive, strategic targets. Capital
IQ, which records industry data,
reports that multiples in 2014/15 todate are now some 10-15% above prerecessionary levels.
It’s not only trade buyers who have
had their cheque books to hand:
private equity house Sun Capital
continues to support the growth-byacquisition of Coveris (two deals in
the mid-market since May 2015) and
Strategic Value Partners paid $250m
for their investment into Linpac.
There is clear, strong evidence to
indicate renewed impetus to sector
consolidation.
The resurgence of M&A activity
has been in part facilitated by the
availability of debt finance with a
variety of banks backing transactions.
The packaging sector is a major
employer in the UK, with some
50,000 working in the industry,
generating annual sales of some
£5bn, so it is a strategically important
to UK PLC.
Commenting on the trends Ed
Wesson said: “It’s no surprise that
the sector is now highly-active again,
as the consolidators have been pretty
quiet through the recession. But with
improving financial performance,
supported by greater funding
liquidity the sector is once-again in
consolidation mode. Our contacts
tell us that our two completions are
indicative of pent up demand, and
STARBUCKS CONSULTANCY
A longstanding client and a successful operator
of a number of global food franchises recently
approached Smith Cooper for advice on the
Starbucks franchise business model.
it operate around 850 stores, turns over approximately
£470m and employs 9,000 staff. For the last few years it
has been restructuring its store portfolio by transferring up
to half of its estate to independent franchisees.
Our extensive experience in a variety of Quick Service Smith Cooper are leading advisers in the UK food and drink
Restaurant Franchises, Costa Coffee and Starbucks itself franchise market having completed over 50 assignments in
made us the obvious choice to provide consultancy advice the last decade or so.”
on Starbucks’ terms, conditions and business model,
and its comparative standing with other major coffee
brands’ offerings. The client was delighted with the output
describing it as “exceptionally valuable, in-depth market
intelligence, delivered with great professionalism”.
Starbucks is credited with leading the growth of the coffee
house culture and accounts for around 25% of UK sales,
behind Costa at around 48% and ahead of Nero. In the UK
4
Deal Dispatch | Issue 22
SAY “CHEESE” ORTHODONTIC
DEAL
The Derby based Corporate
Finance
team
at
Smith
Cooper have
advised a newly
incorporated Newco, set up by 2
West Midlands based brothers
and orthodontist practitioners,
on
its
multimillion
pound
acquisition
of
a
multi-site
orthodontics business.
services, working with a team of lawyers
from Gateley Plc, who provided legal
advice on the deal - Corporate Partner,
Chris Reed leading the team.
years, with an uplift in the demand
for orthodontic treatment and a 23%
increase in adults looking to this type
of dental provision.”
Financing for the deal was provided by
Santander with the advisers working
closely with Sally Beavan (Deputy
Regional Director – Education
& Healthcare). Anne Barker of
The brothers behind the acquisition Mediestates, the Derby-based leader
have over 20 years’ joint experience in in dental broking in the UK, initiated
the dental healthcare profession, with the transaction.
three established practices.
John Farnsworth commented: “The
John Farnsworth and David Crump dentistry market has shown almost
provided full project management continuous growth over the last 20
FRANK KEY CONTINUE
TO BUILD ON EXPANSION
STRATEGY
SCCF
worked
with
Frank
Key Group Ltd on its recent
acquisition of Banson Tool
Hire Ltd and Charles Watson
(Ironmongers) Ltd.
Frank Key was established in 1907
and is a privately owned, independent
supplier of building and timber
materials across Nottinghamshire and
Derbyshire.
This
latest
acquisition
further
strengthens and complements Frank
Key’s business in the Yorkshire area,
and also opens up new geographical
areas. Banson Tool Hire Ltd has
ten branches across Yorkshire and
Lancashire, whilst Charles Watson
(Ironmongers) Ltd has depots in
Halifax and Leeds as well as a large
online presence.
James Norton, Group Managing
Director of Frank Key said “This is a
very exciting acquisition for the Frank
Key Group, expanding our branch
network further north into South &
West Yorkshire and Lancashire. The
purchase increases our number of tool
hire depots to 14 and the addition of the
specialist ironmongery branches, adds
to our builders merchant network.”
Funding for the transaction was
provided by Lloyds.
5
Deal Dispatch | Issue 22
SOCIAL
ENTERPRISE
Newest member of the Smith
Cooper Corporate Finance team,
Darren Hodson, announced his
first project at Smith Cooper
- a strategic review on behalf
of a new client to the firm.
to develop a forward thinking social
enterprise – a concept that Darren is
personally interested in and believes
will bring its own commercial success.
Philanthropy and social responsibility
can
be
important
commercial
differentiators – as observed by
The client, who operates in the Innocent drinks which donates 10% of
public sector, is seeking to expand its its profits to charity.
earnings from commercial activities;
the principle being that by generating Darren’s role was to provide a
commercial profits it can use those strategic review on a potential target
profits in the future to provide more which incorporated an assessment of
effective public services, particularly capabilities, profitability and valuation.
at a time where government funding is There is an ongoing role with the client
being reduced. The client was assessing and additional targets are also being
an investment in the Education and assessed.
Healthcare markets and also seeking
to transfer newly acquired commercial The client commented: “Darren
skills into the public sector, to help provided an excellent service in
improve the quality of life in the assessing a target business in the
community it serves. The concept is Healthcare and Training sectors.
His insight into both sectors was
invaluable. He was able to articulate
the key commercial terms clearly and
concisely. There were a number of
challenges in the target business and
Darren developed creative methods
and solutions to address these issues.
We are definitely going to use him
in the future, and we are already in
discussions on another project.”
It is good to see that even the perceived
capitalist environment of M&A can be
involved in ensuring social enterprise
succeeds.
Upon reflection Darren said “I am
proud to be providing ongoing support
to my clients in this area and there
should be more to announce in the
future”.
6
Deal Dispatch | Issue 22
HILCO ACQUIRES
LEADING
JEWELLERY
RETAILER
Independent, specialist designer
outlet jewellery chain Chapelle
has been sold to investment
firm and owner of the HMV
entertainment
retail
group,
Hilco Capital in a deal managed
and initiated by Smith Cooper.
John Farnsworth commented: “This
transaction is a significant milestone
for Chapelle Jewellery, which comes
after a long and successful period of
ownership. The sale to Hilco Capital
and the opportunities it will generate
will position the business for many
more years of growth. We’re delighted
Chapelle Jewellery, which operates 24 that Paul and Margaret engaged us
stores in designer outlet villages and a to assist them in the sale of their
successful ecommerce website, is the business.”
largest jewellery retailer specialising
in selling end of season jewellery and David Crump added “This transaction
completed in in just over 5 weeks from
watches at discounted prices.
agreeing heads of terms, which was a
Smith Cooper’s Corporate Finance real achievement.”
team members John Farnsworth and
David Crump acted as lead advisers Following the sale of the business, Paul
to Paul and Margaret Mortimer, and Margaret Mortimer will maintain
founders of Chapelle Jewellery. Legal operational control of Chapelle, which
advice was provided by Ran Oren and they have been building for the last 20
Martyn Brierley of Flint Bishop, whilst years.
Natasha Smith, Partner at Smith
Paul Mortimer commented: “Both
Cooper provided tax advice.
Margaret and I are proud to have been
the owners of Chapelle Jewellery for
the last twenty years.
I think I speak for both of us when I say
that we’re thoroughly looking forward
to working with the Hilco team to
develop the business even further.
Hilco have extensive experience that
will allow for continued development
and growth.
We also cannot under-state the regard
which we have come to have for both
the teams advising us throughout the
sale process. Professional, supportive,
high quality, aware, focussed – in fact
there are so many superlatives I could
use.”
7
Deal Dispatch | Issue 22
CONTACT
US
THE TEAM
For impartial, confidential, expert advice please make contact with a member of the
team:
John Farnsworth
Chris Taylor
john.farnsworth@smithcooper.co.uk
chris.taylor@smithcooper.co.uk
Darren Hodson
Andrew Delve
darren.hodson@smithcooper.co.uk
andrew.delve@smithcooper.co.uk
David Nelson
James Bagley
david.nelson@smithcooper.co.uk
james.bagley@smithcooper.co.uk
David Crump
Ed Wesson
david.crump@smithcooper.co.uk
edward.wesson@smithcooper.co.uk
A:
St Helen’s House,
King Street,
Derby,
DE1 3EE
A:
158 Edmund Street,
Birmingham,
B3 2HB
A:
2 Lace Market Square,
Nottingham,
NG1 1PB
T: 01332 374 419
T: 0121 236 6789
T: 0115 945 4300
8