Minnesota is unlikely to see a record-breaking year in company mergers and acquisitions. But it is likely to see more than last year, which is important for companies that need to grow more geographically or build complementary technology.
Take Uponor, which in November became part of Swiss industrial company Georg Fischer. The company, based in Finland, makes plumbing pipes mostly for the residential market and has its North American headquarters in Apple Valley.
Now GF Uponor, the company will be able to work with GF Piping, which serves the industrial and commercial markets, and also expand more in South America, Asia Pacific and the Middle East where Georg Fischer has a greater foothold.
"That's great news for us, because we will continue to have our global headquarters of Uponor at Helsinki and for our North America operations our headquarters will continue to be Apple Valley," said Andres Caballero, president of Uponor North America.
The $2.26 billion deal between two foreign-based international companies was done during a declining M&A market.
For the second year in a row the number of domestic deals declined: 16% from a year ago and 25% from two years ago; international deals declined 18% and 29%, respectively, according to data from Dealogic, a global provider of data and analytics to financial firms.
Deal activity involving Minnesota companies was down 15% in 2023 to 163 deals, and down 26% from the 220 deals done in 2021, the busiest deal year in Minnesota in the past decade. Still, the value of the deals was $10.2 billion, up 49% from the year before.
But two of the largest deals involving Minnesota-based firms in 2023, UnitedHealth's deal to acquire Amedisys for $3.3 billion and Vista Outdoor's to sell its ammunition business to a Czech company for $1.9 billion, are both still pending.
"With tighter financing costs, lengthening timelines and ongoing geopolitical uncertainty, 2023 M&A activity certainly pulled back from the frenzied highs of 2021, and the turbulence of 2022," said Mark Williams, chief revenue officer of Minneapolis-based Datasite, a software-as-a-service provider to the global M&A market.
Signs point to a better 2024, according to Datasite, which provides software for the M&A market and thus has a window when new deal activity starts picking up.
Fourth quarter deal activity rose 14% compared with the same period in 2022, according to the firm.
"And because these are deals at their inception rather than announced, it provides a good indication of what's to come." Williams said. "To be sure, dealmakers are proceeding with caution. They are being more selective, focusing on quality over quantity."
Uponor's North American operations are the fastest-growing part of Uponor. From 2018 to 2022, revenue grew 41% to $524 million, while Uponor's overall revenue grew 16% to $1.5 billion.
Uponor North America was on a fast-growth trajectory a few years ago, and continued to add new employees in 2023. It now employs 800 workers, 585 of which are in Apple Valley. It also runs a manufacturing facility in Hutchinson and a distribution center in Lakeville.
All deals cause raise some questions among employees. Workers knew Uponor was for sale and Georg Fischer eventually won out over a bid from a Belgium-based company.
The structure of the deal made GF Uponor a fourth division, instead of merging it into an existing part of Fischer. GF Uponor becomes the second largest piece of Georg Fischer. In 2022 Uponor had $1.5 billion in revenue and Georg Fischer $4.2 billion in revenue.
Uponor has been investing in quality. In 2021 it tested vision inspection equipment at the Apple Valley plant that continuously monitors the production of their plastic PEX tubing to improve efficiency and reduce waste and installed it throughout in 2023.
It also opened a new 4,500-square-foot experience center in September. The space was designed so it could be reconfigured easily to demonstrate products to customers learning to install Uponor products, their salespeople so they can better explain product benefits, for plant employees who make the products but might not have ever seen them in an installation and for community and school groups interested in one of Apple Valley's largest employers.
Uponor is growing and workers were less concerned with the Georg Fischer deal after learning how little they overlapped in North America. "The anxiety of the pre-acquisition is quickly dying down and now it's about, how do we work together to create value not only for our shareholders, but also to our employees and customers," Caballero said.
According to Caballero, Uponor wanted to continue its geographic expansion in the Asia Pacific, the Middle East and South America and Georg Fischer already has operations in those markets.
The combination with Georg Fischer should speed Uponor's ambition to expand into Mexico and Latin America. "Georg Fisher has a very strong presence in Mexico based out of Monterey and they have a very strong presence in Sao Paulo, in Brazil," Caballero said. "And so all of a sudden, we can start accelerating that."
