J2’s Franklin agrees to buy APi for $2.9b

Bloomberg

J2 Acquisition Ltd, the investment vehicle backed by serial dealmaker Martin E Franklin, made its debut acquisition after an almost two-year search with an agreement to acquire U.S. engineer and oil pipeline contractor APi Group Inc. for about $2.9 billion.
London-based J2, which is run by Franklin and long-time partners James Lillie and Ian Ashken, is looking to build on their track record of creating outsized shareholder returns, most notably with Jarden Corp. Through a string of acquisitions, they grew the small canning business into a diversified consumer-products giant that was sold for about $15 billion to the company then known as Newell Rubbermaid Inc.
APi “demonstrates similar qualities to Jarden, in that it unlocks uncommon value from niche businesses and delivers a strong track record of consistent organic performance complemented by disciplined M&A,” Franklin said.
J2 raised more than $1.2 billion in its 2017 initial public offering in London with a broad mandate to acquire a company in any industry or geographic region. The listing still ranks as the largest-ever share sale globally by a special-purpose acquisition company or so-called “blank-check company.” Closely held APi owns a sprawling network of building and industrial services businesses, doing everything from fire equipment installation and monitoring to structural steel fabrication. It generates 95 percent of its revenue from North America.
J2’s plan is to drive growth at the business via internal projects, acquisitions, and a greater focus on services to help widen margins to 12 percent by 2023 from an expected 10 percent this year. It also wants to list APi on the New York Stock Exchange.
The transaction, at a multiple of 7.4 times earnings for the last 12 months, is being funded via a mix of cash, new debt, rollover equity and early warrant exchange.
Citigroup Inc, Bank of America Cor., Barclays Plc and UBS Group AG have committed to providing financing for the deal. UBS and Citigroup advised J2, while William Blair & Co worked with APi.