Ag Growth International announced that the previously disclosed arrangement to acquire the Westeel
division of Vicwest was completed.
“The strategic acquisition of Canada’s leading brand in grain storage further establishes AGI as a global leader in grain handling and storage solutions,” said Gary Anderson, AGI’s Chief Executive Officer.
• The aggregate purchase price for Westeel was $221.5 million. The purchase price includes net cash on closing of approximately $13 million and a redundant manufacturing plant with an estimated market value of $4 million.
• The acquisition was financed through the issuance of 1,112,050 subscription receipts at $46.55 per receipt for gross proceeds of $51.75 million, the issuance of $51.75 million of extendible convertible unsecured subordinated debentures, and long-term debt. With the completion of the Westeel acquisition, the subscription receipts have been exchanged for 1,112,050 common shares and the maturity date of the debentures has been extended to December 31, 2019.
• Pro forma 2014 revenue of the combined companies is over $600 million. The combination of Westeel with AGI results in a more geographically balanced revenue profile with a pro forma 2014 geographic breakdown as follows:
-Canada 44% (AGI standalone 26%). U.S. 39% (AGI standalone 55%).
-International 17% (AGI standalone 19%).
• Westeel generated adjusted EBITDA of approximately $20 million in 2014. The estimated adjusted EBITDA reflects earnings of the Westeel business (before any costs associated with Vicwest’s corporate support functions that were not transferred to AGI as part of the Westeel acquisition) less incremental corporate support costs AGI estimates will be required post-closing. For the year ended December 31, 2014, AGI generated adjusted EBITDA of $78 million, resulting in pro forma adjusted EBITDA for the period of $98 million.
• Management believes the acquisition of Westeel provides significant SG&A, sales and manufacturing synergies with estimated near-term synergies of $5 million per annum.