Datamars sparks sponsor interest, tipped for upcoming sale – sources
28 July 2020
Swiss agricultural technology firm Datamars is a top target for private equity sponsors and could come to market between the end of 2020 and 1Q21, according to two sources familiar with the situation and two sector bankers.
- Inbound private equity approaches in recent weeks
- Heightened importance of food traceability amid pandemic
- Merck-owned Antelliq named as comparable
Swiss agricultural technology firm Datamars is a top target for private equity sponsors and could come to market between the end of 2020 and 1Q21, according to two sources familiar with the situation and two sector bankers.
There is no active sell side mandate, the sources said. Evercore had been mandated in 2016 for a sale, as reported. Private equity firms have been approaching the business in the hope of igniting a sale for some time, the sources and bankers said.
Astorg, EQT and Partners Group are among a list of several sponsors taking a more recent interest in the asset, the sources and one of the bankers said. Capvis is also looking at the business, one of the sources added. Astorg and EQT did not return requests for comment. Partners and Capvis declined to comment.
Datamars’ estimated current EBITDA is around CHF 50m, according to one of the sources. Its 2016 revenue was around USD 100m with EBITDA at CHF 20m-CHF 30m and a valuation multiple of up to 15x EBITDA, according to a previous report.
The Swiss-based manufacturer of animal identification and tracking tools backed by Caisse de dépôt et placement du Québec (CDPQ), has four business segments: livestock management, animal health delivery, pet identification and reunification, and textile identification.
CDPQ became the company’s largest shareholder in 2017, alongside Datamars’ senior management and Columna Capital, which has been invested in the company since 2011. The pension fund is now considering cashing in on its stake, one of the sources familiar said.
Pandemic performance
The business’s performance has not been impacted by COVID-19 – indeed it is one of those few businesses that has become more attractive because of the pandemic, one of the sources said. The bulk of Datamars’ business involves the traceability of livestock and the food industry has been less afflicted than others as people stay home and eat more, this source added.
There has actually been more of a case for such services following coronavirus outbreaks in German slaughterhouses, strengthening the case for traceability and the need for better understanding of where meat comes from, this source said. In addition to this, there is a regulatory drive to reinforce traceability across the globe, this source added. Datamars operates in an industry driven by trends such as increasing global concerns regarding food safety.
French firm Antelliq is a good comparable for the business, operating a similar identification business but with a broader offering, one of the sources familiar and an industry source said. In 2018, Merck [NYSE:MRK] bought animal intelligence solutions firm Antelliq from BC Partners for EUR 2.1bn.
Antelliq and Datamars are the leading players in the market, with Datamars also providing ancillary products around animal livestock, one of the sources familiar said. Merck is unlikely to buy Datamars for competition reasons but other healthcare companies are likely to look at it, this source added.
The two firms occupy the majority of the market, with the rest of the space taken up with small local players, the industry source said. Datamars offers more animal identification services, whereas Antelliq has expanded into data monitoring, this source added.
Private equity’s approach would likely be a buy-and-build strategy around areas such as data monitoring or data analytics for healthcare, the industry source said.
On investment, CDPQ cited Datamars’ ability to acquire and integrate other companies successfully, growing in each of the segments in which it operates. In 2018, Datamars acquired two New Zealand-based firms: animal health firm Simcro from The Riverside Company; and privately-owned agri-technology company Tru-Test, both for undisclosed amounts.
Datamars, CDPQ and Columna did not return requests for comment.
