Vicwest Auctions Result in Sale to Two Strategic Acquirers

Canadian engineering and agricultural products company Vicwest Inc. said Tuesday that it had agreed to sell itself for C$12.70 per share, meaning its shareholders will receive about C$224 million ($197.3 million), in a process that will see its divisions split among two different buyers.

The deal calls for Irish building supplies manufacturer Kingspan Group plc to acquire Vicwest's building products division, while Winnipeg, Manitoba-based Ag Growth International Inc., will acquire the company's Westeel division.

The entire deal has an enterprise value of C$350 million ($308 million) Vicwest said in a Tuesday statement.

Vicwest CEO Colin Osborne said in a Tuesday statement that the company ran two separate competitive auction processes for the two divisions that received mostly strategic interest. The two businesses being sold will be able to grow and compete better by operating under two different strategic owners, Osborne said.

"The board of directors of Vicwest concluded that operating a construction business and agricultural business under one umbrella is no longer the ideal structure for the long term," Osborne said. "We are confident that this transaction delivers the highest value for Vicwest shareholders."

Kingspan will be paying C$154.5 million in cash for the building products division, which generated C$13.2 million in Ebitda in 2013 on C$253.7 million in revenue. Kingspan is going to fund the acquisition by drawing from its credit facility. The management team from the division is expected to join Kingspan.

Ag Growth is going to pay C$221.5 in cash for Westeel, which makes grain storage systems for the agricultural industry. Westeel is expecting to finish 2014 with around C$20 million in Ebitda and generated about C$580 million in revenue for the trailing 12 months ended Sept. 30.

Ag Growth, which makes grain handling systems, is going to fund the acquisition by raising about C$90 million in notes and has also received a financing commitment from TD Bank NA.

Ag Growth said the acquisition will expand its product base and will allow it to compete better against its global competitors.

Both transactions are expected to close by the end of the 2015 first quarter, pending shareholder approval. Shareholders who own at least 15.6% of Vicwest common stock have agreed to vote in favor of the deal.

The deal agreement does not give Vicwest a go-shop period.

CIBC World Markets Inc. and Goodmans LLP advised Vicwest.

TD Securities Inc. and Burnet, Duckworth and Palmer LLP advised Ag growth. Kingspan did not disclose its advisers.

Vicwest shares opened 19% higher on the Toronto exchange to C$12.70 on Tuesday morning, giving it a market capitalization of around C$224 million.

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