August 11, 2010 / 8:43 PM / 8 years ago

UPDATE 2-Onex profit slips; sees buying opportunities

* Q2 EPS C$0.67 vs analyst view C$0.46

* Revenue slides 1 pct to C$6 bln (Recasts, adds details; in U.S. dollars unless noted)

TORONTO, Aug 11 (Reuters) - Canadian private equity giant Onex Corp OCX.TO, which posted lower second quarter profit on Wednesday, said the market was opening up again for acquisition opportunities.

Onex, in talks to buy a British autoparts maker Tomkins Plc TOMK.L in what would mark the largest private equity deal of the year, said acquisition opportunities were appearing as credit markets improve.

“Since the beginning of the year, our investment pipeline has grown considerably, returning to more normal levels,” Onex Chief Executive Gerald Schwartz said in a statement.

“We believe there will be attractive opportunities in the current cycle to acquire high-quality businesses to create long-term value.”

Last week, Onex said it would acquire Sport Supply Group RBI.O for about $200 million.

In July, it announced a $4.5 billion plan in conjunction with the Canada Pension Plan Investment Board to acquire Tomkins, a global engineering and manufacturing group.

“I think the IPO market weakness also contributes to more properties coming out for private sale,” Onex partner Seth Mersky said during a webcast of the company results.

“IPOs are not as viable an option as we’ve seen relatively poor performance from IPOs this year,” he added.

Private equity companies are also under pressure to sell as they work to post some gains after a long dry spell to distribute funds to their investors.

“So I think that has caused some of what we call secondary activity, private equity firms selling to other private equity firms,” said Mersky. “I think if you combine all those things together, that is some of what’s producing the uptick in acquisition activity.”


Onex reported net earnings of C$80 million ($76 million) compared with C$83 million in the second quarter of 2009, when profit was helped by the sale of an asset.

Earnings in the 2009 period included C$184 million of gains that came primarily from the sale of Onex’s remaining ownership in Cineplex Entertainment in April 2009.

The Toronto-based firm said earnings per share in the latest quarter were 67 Canadian cents, well above analysts’ expectations for 46 cents a share.

Revenue slipped 1 percent to C$6.0 billion, but operating earnings jumped 20 percent to C$493 million.

Onex said it had about C$935 million in cash and near-cash items at the end of July, with no debt at the parent company and about $3.8 billion of “third-party uncalled capital” for acquisitions through the Onex Partners and ONCAP Funds.

Before the results, Onex shares closed down 3.68 percent at C$27.19 as the Toronto Stock Exchange retreated 2.16 percent.

$1=$1.05 Canadian Reporting by Pav Jordan; editing by Rob Wilson

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