Ronin-backed Due North picks up another refrigerated display maker

Ronin Equity Partners will announce later this morning that its recently launched operating company Due North has acquired MTL Cool. Both companies are based in the Toronto area and provide refrigeration equipment for retailers, including grocery stores, pet stores, pharmacies and ice cream shops.

Together, Due North and MTL Cool earn $150 million in yearly revenues, with the top line growing 25 percent annually, according to Ronin. Combined, they will be the second-biggest supplier of commercial refrigeration display coolers in North America by sales, the New York private equity firm said.

Last year, Ronin acquired QBD and Minus Forty, and last month, the PE firm combined their offerings into Due North.

David Feierstein, co-founder and managing partner of Ronin, shared more on the deal with PE Hub in an exclusive interview.

What’s driving dealmaking in the refrigeration sector?

The two catalysts behind dealmaking are owners approaching retirement age and the major size difference between market leaders and their competitors. The North American refrigeration sector, particularly in commercial coolers, saw little consolidation until recently due to limited capital. Bringing the Due North companies together clearly marked a turning point.

There’s lots of talk about the gap between the expectations of buyers and sellers these days. How did you come to terms on this deal, especially on valuation?

Expectation gaps are bridged if you’ve got the right formula for the future and that’s the case here. It was evident each business would benefit materially from combining. Moreover, MTL Cool’s management was able to roll equity into Due North, and they recognized the material upside of that.

Why do you think Due North is the right company to consolidate this industry and what are the future plans to do that?

We consciously created a partnership between legacy owners and new talent. For potential partners, that combination of expertise, traditional values and ambitious vision is very compelling. We are just getting started consolidating this industry.

What are the exit opportunities, and how long do you anticipate holding Due North?

We are building exceptional brands, great margins and strong cash flows. We see strategic acquirers out there who would already judge Due North highly accretive. There’s no time horizon for selling, but before we do, we want to make sure we’ve successfully achieved all of our ambitious plans.