It has been a busy month for cross border M&A activity. We have seen two large European support services players with large cash piles on the acquisition trail: Securitas AB announced the acquisition of two companies in South America, in Chile and Argentina, and Compass Group acquired four companies, two in India, one in Japan and the other in the UK. In the UK, the support services market continues to be attractive for overseas investors. In April for example, Imtech N.V., from the Netherlands, continued its UK expansion through the acquisition of the Smith Group to grow its presence in the UK technical services market.
Clearwater continues to see a strong trend for cross border activity, with 80 per cent of our M&A transactions in the last 12 months having been cross border. So just what is driving international deal flow? Certainly one of the reasons for this increased activity is the fact that many corporates are facing low GDP growth in many of their markets. This is encouraging them to seek targets in faster growing territories and market segments or to seek additional scale and synergies in the markets they are already present. For investors coming into the UK, despite the recession, there is a perception within overseas groups that the UK is still a safe and interesting place to invest with the upside from an economic upturn still to come through. Many of these corporates have been quiet in terms of recent M&A as they have been internally focused on getting their own businesses and balance sheets into line with the current economic outlook. With stronger finances, often new management and ideas they now have the desire and fire power for strategic and bolt-on acquisitions with bank and shareholder support to do so.
Sectors that remained hot within the UK market in April included security services, with G4S acquiring The Costwold Group for £10.2 million, waste management services, with HW Martin Waste Ltd acquiring Premier Waste Management Ltd, and support services with Compass Group acquiring PPP-Infrastructure Management Ltd. These deals are part of the on-going trends for consolidation within these markets with the best targets still selling for excellent valuations.
G4S Plc, the security services firm, acquired The Cotswold Group Ltd for GBP 10.2m. Established in 1990, the 260 employees of The Costwold Group offer surveillance and fraud investigation services across the UK. G4S is one of the worlds largest security firm, with sales in excess of Euro 8,540m. In acquiring Costwold group, G4S further consolidates its market position in the UK.
HW Martin Waste Ltd, the waste recycling company of HW Marting Group, acquired Durham based Premier Waste Management Ltd in what is another step towards the company establishment in the North East of the UK. HW Martin Waste Ltd acquired the collections business, operating centres and Washington MRF operations of Premier Waste Management for an undisclosed amount.
Imtech N.V., the technical services company from the Netherlands, acquired the UK based Smith Group UK Ltd for an undisclosed consideration. The Smith Group employs 270 people and offers construction and Facilities Management services, including mechanical and electrical services, throughout the UK. This acquisition will allow Imtech N.V. to grow its presence in the UK market.
The UK construction services provider Interior Services Group Plc (ISG) acquired 85% of Realys Group, the Chinese design and project management company for CNY 58.5m (GBP 5.6m).Relays Group employs 25 people, mostly engineers, and it was owned by Benoit Greindl and Eric Goraieb from Belgium. With this acquisition ISG expects to enter the Chinese market and to serve its clients in China and Hong Kong.
The leading manufacturer of security print products Magnadata Group acquired Character DPM Group, a provider of direct mail and fulfilment services. After filling for bankruptcy in February 2011, Character DPM Group was under administration of KPMG. After the acquisition, Magnadata Group will keep in operation the two print outlets and the fulfilment operation in Aintree, safeguarding approximately 111 jobs across the three sites.
Norit N.V., the Dutch manufacturer of purification technologies, sold its Clean Process Technologies (CPT) division to Pentair for EUR 503m. With 1200 employees, CPT manufactures membranes, and other process technologies, for water and wastewater treatment services. This acquisition will allow Pentair to offer a complete range of solutions to its industrial customers.
Private equity houses Mercapital S.L. from Spain and Permira from the UK have acquired Clece S.A., the Spanish facilities management company from Actividades de Construcciony Servicios S.A. (ACS), the Spanish construction and support Services Company for a EUR 608m.
Catering and Business Support Services Company Compass Group Plc acquired Ultimate Hospitality Services Private Ltd and Vipul Facility Management Pvt. Ltd in India in a bid to tap into the high-growth Catering and Facilities Management Indian market. Ultimate Hospitality Services provides catering and fine dining services and Vipul Facility Management offers facility management services, including helpdesk, engineering, cleaning, and security services.
In Japan, the local subsidiary of Compass Group, Seiyo Food Inc. acquired Morinaga Food Service Co. Ltd, involved in food delivery, restaurants, and retail businesses; the company had revenues of USD 34.73m in 2010 and 117 employees. The acquisition of Morinaga will allow Compass Group to grow its market share and add a new service line to its operations in Japan.
Compass Group acquired PPP-Infrastructure Management Ltd, from Semperian PPP Investment Partners Group Ltd, for an undisclosed consideration. The acquisition consolidates Compass Group market share in the UK Healthcare, Education and Defence support services market.