Pitch Best Small Cap 2019: MBrands – North Technology group

De genomineerde deals maken dit jaar kans op de M&A Award voor Best Small Cap Deal 2019. Deze pitch is ingezonden door Tom Beltman van Martktlink Fusies & Overnames

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Date deal closed
3 januari 2019

Published value
10-50 million

North Technology Group

MBrands International BV (Now North Action Sports Group BV)

Seller Marcus Blom NV

Involved firms and advisors sell side: (Financial, Legal, Transaction Services etc.)
Marktlink M&A, Marktlink Legal, STP Tax lawyers, Van Waateringe Notariaat BV, Wintertaling

Involved firms and advisors target: (Financial, Legal, Transaction Services etc.)
Marktlink M&A, Marktlink Legal, STP Tax lawyers, Van Waateringe Notariaat BV, Wintertaling

Involved firms and advisors buy side: (Financial, Legal, Transaction Services etc.)
Paul Hastings LLP, Oakley, Moore Stephens, Van Doorne NV

Brief description deal / Deal outline
North Technology Group limited acquired 100% of the shares in MBrands international BV (now the North Action sports group BV). MBrands International was the owner of kiteboarding accessory brand (world market leader) Mystic and sailing brand Magic Marine.     North Technology Group is part of the private equity firm Oakley Capital. MBrands International used to be owned by Marcus Blom NV owned by Max Blom Snr. Max Blom Snr (61) acquired the company in 2007 via a Management Buy In (MBI) transaction. Previously, he had been CEO/Managing Partner/Co-owner of several leading companies in the water sports market, including O’Neill, Gaastra and Brunotti. When he acquired the company, Max Blom Snr had a clear and solid plan: to build a market leading platform, operating in the kite surfing market. Under his leadership both Mystic and Magic Marine quadrupled in terms of turnover and became recognised internationally.

Deal rationale
During the summer of 2018 Max Blom Snr perceived a great deal of movement in the market for water action sports. Max Blom Snr felt that he should act but had not yet decided whether to buy additional, smaller firms or sell his company to an investor or strategic partner. When Marktlink was selected as the M&A advisor, both options were left open and Marktlink explored together with Max Blom Snr the chances of success of both a buy-and-build strategy and the search for an international strategic buyer.    It was then that Max Blom Jnr, the director of Mystic, ran into Richard Loth, operational director of the North Technology Group (NTG) at a kiteboarding convention. North Kiteboarding (NKB), part of the NTG, used to be a kiteboarding brand, licenced to a third company. The licence agreement had come to an end and North Technology Group (NTG) was looking to relaunch NKB into the market on its own.     Richard initially proposed a partnership to Max Jnr, not knowing that his father was exploring his options of acquiring similar companies. They arranged their first meeting on the yacht of Max Blom Snr, where the latter proposed that NTG should buy MBrands: Love at first sight. MBrands, a much smaller company than NTG, provided the perfect launching pad for the relaunch of NKB. MBrands had an international distribution system in place, a strong headquarters in the Netherlands and contacts with the right professionals to promote the new NKB brands. Moreover, Mystic is a kiteboarding accessory brand whereas NTG makes kites and boards: a perfect combination. MBrands was the solution to the problem NKB was struggling with.

What is the impact of this deal for the company?
The impact is significant. The Dutch office, employing over 30 fte, was suddenly the head office of a much larger kiteboarding brand. MBrands was centrally organised form Katwijk, while NKB had offices from USA to New Zealand.     

While Max Blom Snr was used to running larger companies during his time at O’Neill, he loved MBrands precisely for the small scale business it was. That changed completely with international board meetings, targets and aligning interests of all countries involved. The transformation from being a smaller company which became part of a large group was perceived as a major opportunity and the start of a new chapter by both the management and the employees.

What is the impact of this deal for the direct stakeholders?
The deal will lead to a significant amount of new jobs for the company. The Dutch brands Mystic en Magic Marine experience a boost due to the enormous span of control and market position of North Sails.   For the Blom family, including his son and daughter who work for the company, it is an adventure to lead one of the largest brands with a leading name in the kite surfing market.

What is the impact of this deal on the society?
Worldwide, kite surfing is a large and growing sport. The merger between the market leader in equipment (Dutch brand Mystic) and a leading brand in boards (North) was perceived as great news all over the world. The impact on the kite surfing community was huge.

Why does this deal deserve a nomination?
Brands are often perceived as very valuable by the Seller, but finding a buyer with a matching perception is not common. In general, one of the brands gets ‘killed’ after transaction, and the smaller (Dutch) company is fully incorporated into the larger international company. In this case it is the other way round: the smaller Dutch Brand acts as the new headquarters for the entire range of kite surfing activities of the buyer, which will lead to a significant growth in number of employees in the Netherlands, brand awareness and opportunities for the stakeholders. And, remarkably, this had been Max Blom Snr’s from the start.

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