Ag
Growth International Inc. (TSX: AFN) (“AGI” or the “Company”) is pleased to
announce it has acquired 100 percent of the outstanding shares of Global
Industries, Inc. (“Global”) for US $100 million
Global is a diversified manufacturer of grain storage bins, portable and stationary grain handling equipment, grain drying and aeration equipment, structural components, and steel buildings.
Global has four divisions located in Nebraska and Kansas, production capacity
in South Africa, and warehouses in the US, Europe, Australia and Africa.
Global’s product catalogue and domestic and offshore geographic sales are highly complementary to AGI’s existing footprint, and are expected to substantially expand AGI’s North American and international grain handling, drying and storage platforms in both Farm and Commercial segments.
“We are excited today to announce that we have acquired the Global family of companies. This highly strategic transaction brings key products, very talented people, and great brands into the AGI group, and significantly increases our US manufacturing capabilities and distribution channels,” said Tim Close, President and Chief Executive Officer of AGI.
“The US grain market continues to be a core supplier of the world’s food and AGI is committed to our dealers and customers in this important market. Jack Henry has built four strong businesses within Global which have benefited immensely from the leadership of Doug Fargo and his teams in Nebraska, Kansas and internationally as they pushed to grow their business both domestically and abroad. AGI and Global share very similar cultures and values that are focused on employees, customers, and achieving success. We are proud to welcome all Global employees to AGI, and look forward to working together to continue to partner with our combined suppliers and dealers to excel at earning our customers’ respect and business”, continued Mr Close.
“It was a very difficult decision for me to decide to sell Global Industries,” said Jack Henry, Chairman and Chief Executive Officer of Global.
“However, the culture and the way AGI does business were a great fit for Global and I’m very excited for Global’s future prospects as part of AGI. I would also like to thank each and every current and former employee of Global for everything they have done for Global, and for me personally, over the past 15 years. Without their support and contributions, Global would not be the great company that it is today”, continued Mr Henry.
The US $100 million purchase price for Global (subject to customary post-closing adjustments), was financed by cash on hand and AGI’s revolving credit facility.
Global’s normalised EBITDA1 averaged approximately US $11.5 million over the three years ended November 30, 2016.
In the four years prior to 2015, being the years before the current downturn in the US farm market, Global’s normalised EBITDA1 averaged approximately US $17 million.
AGI expects the transaction to be immediately accretive to profit per share and funds from operations.
Transaction Rationale
Management believes the acquisition of Global is highly strategic and enhances AGI’s competitive position as a manufacturer of grain handling, storage, and conditioning equipment in Farm and Commercial markets, bothdomestically and internationally.
Management also believes the combination provides the following benefits to AGI:
• Expanded US Presence: Global’s well-established, high quality brands in key US markets expand AGI’s existing product lines and add new product categories, which are expected to significantly grow AGI’s manufacturing and distribution capabilities.
• Enhanced Geographic Positioning: The combination with Global provides AGI with additional scale to compete against large, global peers in an environment of industry consolidation.
- Pro forma annual revenue increases by approximately 27 percent to approximately $700 million for 2016
- The combined company's product catalogue and geographic footprint is expected to materially enhance AGI's ability to serve a broad customer base and provide complete solutions across North American and international markets
- Global’s customer and geographic focus in offshore markets is largely complementary to AGI’s, providing the combined company with potential sales synergies and an enhanced global footprint. International sales represented approximately 27 percent of Global’s total sales in 2016
• Broader Product Offering: Global’s grain drying and stationary handling products are a strong addition to AGI's existing Farm product catalogue.
- Global’s strength in stationary handling equipment provides AGI with access to new dealers and customers that are not currently addressed by AGI’s core portable grain handling offering
- Global’s grain dryer is an important addition to AGI’s Canadian product offering, especially in light of management’s anticipation of increased acres of corn and soybeans in western Canada. Offshore, AGI had previously purchased dryers from third parties when selling bundled projects, and going forward will be able to include Global dryers in some of these projects
• Diversification of Customers, Dealers and Geography: Global has over fifty years of experience selling storage bins in the US market and provides AGI with a high quality and well established bin dealer network.
- Pro forma the transaction, approximately 45 percent of 2016 revenue was generated in the US as compared to 38 percent for AGI standalone, providing additional opportunities in the important US market, and 20 percent was generated outside of North American as compared to 19 percent for AGI standalone
• Significant Potential Sales, Manufacturing and SG&A Synergies: AGI has identified several opportunities for sales, operational and financial synergies, including marketing AGI products through Global’s US and international sales force, shared product design and manufacturing, and the centralised procurement of production materials.
• Purchase Price: The transaction is being completed at a compelling valuation relative to Global’s longer term financial performance, and is backed by a significant asset base.
Overview of Global Industries’ Operating Divisions
MFS, York, Stormor and Brownie:
Based in Grand Island, Nebraska, these brands design and manufacture storage bins, stationary grain handling equipment, and structural components for both Farm and Commercial applications. Bin sales are primarily in the US Great Plains region, which has minimal geographic overlap with AGI’s Westeel bin sales, and the stationary on-farm grain handling equipment is a new addition to AGI’s product portfolio.
Hutchinson and Mayrath:
Produces portable and stationary grain handling equipment, including bin unloads, augers, conveyors, and grain loop systems in Clay Centre, Kansas. Bin unloading systems are the division’s largest product line, and grain loop products, which enable the connection of several bins into one storage system, are a new addition to AGI’s product portfolio.
NECO:
Based in Omaha, Nebraska, NECO produces grain dryers, aeration, and handling equipment. A new product line for AGI, grain dryers are increasingly important in Canadian markets as management expects corn and soybean acreage to increase.
Sentinel Building Systems:
Designs and builds all-steel and wood-steel buildings in Albion, Nebraska. The buildings are primarily for agricultural uses, such as poultry buildings and partially enclosed storage structures for feed, as well as commercial and self-storage applications. Sentinel also produces a line of light-duty tower and catwalk systems.
Financing
AGI today also announced a $75 million, plus 15 percent over-allotment option, convertible unsecured subordinated debenture bought-deal offering, the proceeds of which will be used to reduce indebtedness and for general corporate purposes.
In connection with the acquisition, AGI’s credit facilities have been amended to extend the maturity to 2021 and enhance AGI’s financial flexibility. AGI’s pro forma 2016 senior debt to EBITDA, reflecting the Global acquisition and the net anticipated convertible debenture proceeds before the over-allotment option, is approximately 2.6x.
Company Profile
Ag Growth International Inc. is a leading manufacturer of portable and stationary grain and fertiliser handling, storage and conditioning equipment, including augers, belt conveyors, grain storage bins, grain handling accessories, grain aeration equipment and grain drying systems.
AGI has manufacturing facilities in Canada, the United States, Italy, Brazil and the United Kingdom, and distributes its products globally.
For information on Non-IRFS measures, pro-forma information, and looking forward information, view the original press release, HERE.
Visit the Ag Growth International Inc. website, HERE.
Visit the Global Industries Inc. website, HERE.
Global is a diversified manufacturer of grain storage bins, portable and stationary grain handling equipment, grain drying and aeration equipment, structural components, and steel buildings.
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| Image: 드림포유 |
Global’s product catalogue and domestic and offshore geographic sales are highly complementary to AGI’s existing footprint, and are expected to substantially expand AGI’s North American and international grain handling, drying and storage platforms in both Farm and Commercial segments.
“We are excited today to announce that we have acquired the Global family of companies. This highly strategic transaction brings key products, very talented people, and great brands into the AGI group, and significantly increases our US manufacturing capabilities and distribution channels,” said Tim Close, President and Chief Executive Officer of AGI.
“The US grain market continues to be a core supplier of the world’s food and AGI is committed to our dealers and customers in this important market. Jack Henry has built four strong businesses within Global which have benefited immensely from the leadership of Doug Fargo and his teams in Nebraska, Kansas and internationally as they pushed to grow their business both domestically and abroad. AGI and Global share very similar cultures and values that are focused on employees, customers, and achieving success. We are proud to welcome all Global employees to AGI, and look forward to working together to continue to partner with our combined suppliers and dealers to excel at earning our customers’ respect and business”, continued Mr Close.
“It was a very difficult decision for me to decide to sell Global Industries,” said Jack Henry, Chairman and Chief Executive Officer of Global.
“However, the culture and the way AGI does business were a great fit for Global and I’m very excited for Global’s future prospects as part of AGI. I would also like to thank each and every current and former employee of Global for everything they have done for Global, and for me personally, over the past 15 years. Without their support and contributions, Global would not be the great company that it is today”, continued Mr Henry.
The US $100 million purchase price for Global (subject to customary post-closing adjustments), was financed by cash on hand and AGI’s revolving credit facility.
Global’s normalised EBITDA1 averaged approximately US $11.5 million over the three years ended November 30, 2016.
In the four years prior to 2015, being the years before the current downturn in the US farm market, Global’s normalised EBITDA1 averaged approximately US $17 million.
AGI expects the transaction to be immediately accretive to profit per share and funds from operations.
Transaction Rationale
Management believes the acquisition of Global is highly strategic and enhances AGI’s competitive position as a manufacturer of grain handling, storage, and conditioning equipment in Farm and Commercial markets, bothdomestically and internationally.
Management also believes the combination provides the following benefits to AGI:
• Expanded US Presence: Global’s well-established, high quality brands in key US markets expand AGI’s existing product lines and add new product categories, which are expected to significantly grow AGI’s manufacturing and distribution capabilities.
• Enhanced Geographic Positioning: The combination with Global provides AGI with additional scale to compete against large, global peers in an environment of industry consolidation.
- Pro forma annual revenue increases by approximately 27 percent to approximately $700 million for 2016
- The combined company's product catalogue and geographic footprint is expected to materially enhance AGI's ability to serve a broad customer base and provide complete solutions across North American and international markets
- Global’s customer and geographic focus in offshore markets is largely complementary to AGI’s, providing the combined company with potential sales synergies and an enhanced global footprint. International sales represented approximately 27 percent of Global’s total sales in 2016
• Broader Product Offering: Global’s grain drying and stationary handling products are a strong addition to AGI's existing Farm product catalogue.
- Global’s strength in stationary handling equipment provides AGI with access to new dealers and customers that are not currently addressed by AGI’s core portable grain handling offering
- Global’s grain dryer is an important addition to AGI’s Canadian product offering, especially in light of management’s anticipation of increased acres of corn and soybeans in western Canada. Offshore, AGI had previously purchased dryers from third parties when selling bundled projects, and going forward will be able to include Global dryers in some of these projects
• Diversification of Customers, Dealers and Geography: Global has over fifty years of experience selling storage bins in the US market and provides AGI with a high quality and well established bin dealer network.
- Pro forma the transaction, approximately 45 percent of 2016 revenue was generated in the US as compared to 38 percent for AGI standalone, providing additional opportunities in the important US market, and 20 percent was generated outside of North American as compared to 19 percent for AGI standalone
• Significant Potential Sales, Manufacturing and SG&A Synergies: AGI has identified several opportunities for sales, operational and financial synergies, including marketing AGI products through Global’s US and international sales force, shared product design and manufacturing, and the centralised procurement of production materials.
• Purchase Price: The transaction is being completed at a compelling valuation relative to Global’s longer term financial performance, and is backed by a significant asset base.
Overview of Global Industries’ Operating Divisions
MFS, York, Stormor and Brownie:
Based in Grand Island, Nebraska, these brands design and manufacture storage bins, stationary grain handling equipment, and structural components for both Farm and Commercial applications. Bin sales are primarily in the US Great Plains region, which has minimal geographic overlap with AGI’s Westeel bin sales, and the stationary on-farm grain handling equipment is a new addition to AGI’s product portfolio.
Hutchinson and Mayrath:
Produces portable and stationary grain handling equipment, including bin unloads, augers, conveyors, and grain loop systems in Clay Centre, Kansas. Bin unloading systems are the division’s largest product line, and grain loop products, which enable the connection of several bins into one storage system, are a new addition to AGI’s product portfolio.
NECO:
Based in Omaha, Nebraska, NECO produces grain dryers, aeration, and handling equipment. A new product line for AGI, grain dryers are increasingly important in Canadian markets as management expects corn and soybean acreage to increase.
Sentinel Building Systems:
Designs and builds all-steel and wood-steel buildings in Albion, Nebraska. The buildings are primarily for agricultural uses, such as poultry buildings and partially enclosed storage structures for feed, as well as commercial and self-storage applications. Sentinel also produces a line of light-duty tower and catwalk systems.
Financing
AGI today also announced a $75 million, plus 15 percent over-allotment option, convertible unsecured subordinated debenture bought-deal offering, the proceeds of which will be used to reduce indebtedness and for general corporate purposes.
In connection with the acquisition, AGI’s credit facilities have been amended to extend the maturity to 2021 and enhance AGI’s financial flexibility. AGI’s pro forma 2016 senior debt to EBITDA, reflecting the Global acquisition and the net anticipated convertible debenture proceeds before the over-allotment option, is approximately 2.6x.
Company Profile
Ag Growth International Inc. is a leading manufacturer of portable and stationary grain and fertiliser handling, storage and conditioning equipment, including augers, belt conveyors, grain storage bins, grain handling accessories, grain aeration equipment and grain drying systems.
AGI has manufacturing facilities in Canada, the United States, Italy, Brazil and the United Kingdom, and distributes its products globally.
For information on Non-IRFS measures, pro-forma information, and looking forward information, view the original press release, HERE.
Visit the Ag Growth International Inc. website, HERE.
Visit the Global Industries Inc. website, HERE.
The Global Miller
This blog is maintained by The Global Miller staff and is supported by the magazine Milling and Grain
which is published by Perendale Publishers Limited.
For additional daily news from milling around the world: global-milling.com
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