Blue Ant plots more M&A following Boat Rocker deal

Canada’s Blue Ant Media is considering raising further finance to fuel an M&A streak as it plots for “significant” growth following its deal to go public.

The Michael MacMillan-led company revealed a reverse takeover (RTO) of fellow Canadian firm Boat Rocker Media on Monday, handing it a raft of assets and access to considerably more financial backing.

In a call to Broadcast International following the deal’s announcement, MacMillan said the move will allow Blue Ant, which he has to date held privately, to “turbocharge” its channels, distribution and production business.

The former Alliance Atlantis exec chairman added that raising extra financing is also being considered, as he looks to remain “nimble” and move quickly when M&A opportunities emerge.

Unpacking the deal

The RTO will see Blue Ant taking over the shell of Boat Rocker Media, enabling it to go public on the Toronto Stock Exchange without an IPO and in a quicker timeframe with less legal work required.

Three production companies have also been picked up – Insight Productions, Proper Television and Jam Filled Entertainment – along with almost C$40m (£21.6m) in working capital and cash.

A C$20m (£10.8m) backstop to support a further equity raise is also in place from Fairfax Financial Holdings, which engineered the deal having been a majority shareholder in Boat Rocker and an ongoing partner in Blue Ant.

Once completed, the deal will hand MacMillan and Blue Ant shareholders a 73.5% in the company and Boat Rocker’s shareholders, namely Fairfax, a 26.5% stake.

Fairfax offered Blue Ant the RTO with Boat Rocker’s senior management already preparing to exit the business via a management buy-out, and MacMillan told Broadcast International the deal immediately appealed.

“We think there are opportunities in this disrupted time for us to grow significantly, including via M&A. To do that, we need to have reliable access to permanent capital,” he said, pointing out that Blue Ant has not raised any financing since 2016, with growth instead fuelled wholly organically.

“We also think quite firmly that media companies should not be borrowing a lot of money. Leverage is a dreadful thing for companies that need to be nimble and agile, which need to zig and zag. A lot of debt prevents that.”

M&A strategy

A further financing raise is being explored but the Blue Ant boss said that even if he decides not to pursue that approach, the RTO has positioned his company for a considerable growth spree.

“We are considering doing another equity offering in the immediate future and then we will have even more dry powder. But even if we decide not to, we still have a very strong balance sheet – it is very hard in this market to do an IPO and raise money.”

With a bolstered balance sheet in place, MacMillan wants to retain his unscripted focus and look for deals to expand its global, multi-platform channels business, which houses the likes of Love Nature, and its production-distribution capabilities.

“We’re hoping and assuming that some of our M&A will be focused on advancing our global streaming business, either by buying existing channels or acquiring libraries of content that we would use to turbocharge those channels.”

He points to Love Nature, “which is a pay product, it’s on FAST, it can be a white label brand, it exists in various ways in various countries. We’d love for it to be part of a bouquet of brands, each offering a pay channel, FAST and so on, where we own rights,” he continued, with a focus on genres that travel well.”

He added: “The second general opportunity we see is increasing our production capacity and acquiring libraries of programming,” with a focus on unscripted. “That will help to continue grow distribution but also our channel business.”

Opportunistic deal an ‘enabler’

MacMillan said the move to go public would not shift Blue Ant’s long-term strategy, but rather “enable it, giving us greater size, more production capacity and obviously a public float.” Geographically, the M&A focus remains on North America, the UK and Europe, he added.

While Blue Ant has gained more muscle, it remains among a raft of companies facing disruption from the potential effects of US trade tariffs.

But MacMillan played down the impact, saying: “Our point of view is that what comes will come. A tariff problem today might take a couple of years but we’ll get through it – and we’re not going public for what is going to happen this year.

“We’re going public because we think we have a chance to build a strong, sustainable ongoing business over time. We’ll be coming out of this year with a strong balance sheet and that is really helpful strategically, even if there are worries about the tariffs.”

He added that the company’s move to become public had been under consideration over recent years but that the weak IPO market had dissuaded a move.

“We’d been wondering for some time about going public and we’d been vaguely thinking about it,” he said.

“But there has been no market for IPO’s in North America for the past three years and there’s not today either, so when we were offered this opportunity by Fairfax Financial, which was the controling shareholder of Boat Rocker and one of my founding shareholder partners at Blue Ant, it was a great opportunity. And we opportunistically grabbed it.”