Posted on April 7th, 2017 by


  • Complementary product catalogue adds grain dryer line and strong on farm stationary handling capabilities
  • Improves grain bin and handling distribution reach across the U.S. and internationally
  • Broadens geographic reach with access to new offshore customers
  • Attractive purchase price in the context of current U.S. farm cycle
  • Transaction expected to be immediately accretive and provide significant synergy opportunities
  • Balance sheet expected to remain strong following concurrent convertible debenture issuance

Winnipeg, MB, April 4, 2017 – Ag Growth International Inc. (TSX: AFN) (“AGI” or the “Company”) is pleased to announce it has acquired 100% of the outstanding shares of Global Industries, Inc. (“Global”) for U.S. $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 U.S., Europe, 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.

The U.S. $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 normalized EBITDA1 averaged approximately U.S. $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 U.S. farm market, Global’s normalized EBITDA1 averaged approximately U.S. $17 million. AGI expects the transaction to be immediately accretive to profit per share and funds from operations[1].

“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 U.S. manufacturing capabilities and distribution channels,” said Tim Close, President and Chief Executive Officer of AGI. “The U.S. grain market continues to be a core supplier of the world’s food and AGI is committed to our dealers and customers in this Great 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 live up to the company’s name. 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.”

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, both domestically and internationally. Management also believes the combination provides the following benefits to AGI:

  • Expanded U.S. Presence: Global’s well-established, high quality brands in key U.S. 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% 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% 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 U.S. market and provides AGI with a high quality and well established bin dealer network.
    • Pro forma the transaction, approximately 45% of 2016 revenue was generated in the U.S. as compared to 38% for AGI standalone, providing additional opportunities in the important U.S. market, and 20% was generated outside of North American as compared to 19% 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 U.S. and international sales force, shared product design and manufacturing, and the centralized procurement of production materials.
  • Attractive 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 U.S. 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 Center, 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 North 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.

[1] See “Non-IFRS Measures” below.

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