Federal competition watchdogs have cleared the path for grain handling equipment maker Ag Growth International to close its deal for bin manufacturer Westeel.
AGI announced it had completed its deal to buy its fellow Winnipeg-based manufacturing firm for $221.5 million on Wednesday — after announcing the Competition Bureau of Canada would allow the deal on which the Westeel sale hinged.
The deal, first proposed in November, calls for Irish building materials manufacturer Kingspan Group to buy Westeel’s Winnipeg parent, Vicwest, for about $350 million and to sell the Westeel division to AGI.
Kingspan keeps Vicwest’s separate Vicwest Building Products division, which makes several brands of metal cladding and roofing for the residential, commercial and farm sectors.
The Competition Bureau’s consent agreement for the Vicwest deal, however, calls for Kingspan to find a buyer for Vicwest’s manufacturing facility in Hamilton.
The bureau said it found Kingspan’s takeover of Vicwest would otherwise “likely result in a substantial lessening of competition for the supply of insulated metal panels in Ontario by eliminating the competition between Kingspan and Vicwest.”
“Kingspan worked co-operatively and quickly with the bureau to find a solution to the concerns expressed,” Jeanne Pratt, senior deputy commissioner for the bureau’s mergers branch, said in a separate release Tuesday.
“With the sale of the Hamilton operations, insulated metal panels customers such as installers, general contractors, and commercial and industrial building owners will benefit from competition when buying insulated metal panels.”
“Westeel’s complementary product offering expands our growth platform within North America and around the world and we look forward with enthusiasm to bringing this outstanding company into the AGI family,” AGI CEO Gary Anderson said in the company’s release.
AGI president Tim Close added that the company “places the highest value on the contributions of its employees and we look forward to meeting and welcoming all of the people at Westeel.”
Westeel makes grain bins at Winnipeg and Saskatoon and petroleum storage tanks at Olds, Alta. and Tisdale, Sask., and runs distribution centres at St-Simon-de-Bagot, Que., Fargo, N.D., Saskatoon and Winnipeg.
AGI’s stable of manufacturers already includes Twister and Grain Guard, two manufacturers of hopper-bottom and flat-bottom bins.
AGI, however, said last fall that Westeel complements the Twister and Grain Guard lines with products “not currently part of AGI’s catalogue,” such as smoothwall bins, hopper cones and commercial hopper-bottom bins.
The $221.5 million aggregate purchase price for Westeel includes about $13 million in net cash on closing, plus a “redundant” Westeel manufacturing plant in Regina, which is up for sale with an estimated market value of about $4 million.
Westeel had set up a “strategic alliance” in 2010 with another Winnipeg manufacturer, Buhler Industries, to sell Buhler-made, Westeel-branded grain handling equipment through Westeel’s Canadian distribution chain. Buhler’s Farm King division, in a separate agreement, served as the exclusive distributor for Westeel in the U.S.
According to Buhler, those arrangements with Westeel expired in 2013 and were not renewed. — AGCanada.com Network