Legumex Walker Selling Special Crops Business
TORONTO - Sep 14/15 - SNS -- Legumex Walker Inc. has agreed to sell its special crops business to The Scoular Company for $94 million plus the amount of net working capital at closing, on a cash free debt free basis, paid in cash.
LWI says the sale represents a $174.6 million transaction value, based on LWI's working capital as at June 30, 2015. The actual purchase price and transaction value are subject to working capital and other adjustments in accordance with the Agreement.
Scoular is a leading U.S.-based agricultural marketing company that manages supply chain risk for global suppliers and end-users of grains, oilseeds, and other feed and food ingredients.
"Following careful review of the transaction by the Special Committee in consultation with our external financial and legal advisors, we believe this transaction represents excellent value and is in the best interests of LWI shareholders," said Bruce Scherr, Chairman of the Board of Directors of Legumex Walker Inc.
Bob Ludington, Scoular's Chief Operating Officer added, "This is a highly strategic addition to our existing global feed and food ingredient merchandising business and U.S.-based grain-handling network.
"The transaction will significantly increase our product and geographic footprint, which in turn will increase our ability to serve new and existing customers worldwide. We expect to operate Scoular Special Crops much like LWI operates the business today, but with the financial capacity to expand operations, product lines, and distribution channels. As a result, we will be able to provide additional value to Canadian producers and pursue opportunities to serve a global customer base seeking specialty products associated with healthy food trends."
The transaction has been approved unanimously by LWI's Board of Directors, which has determined that the transaction is in the best interests of the Company and its shareholders and recommends that shareholders vote in favour of the transaction at a Special Meeting of Shareholders, which will be scheduled for November 9, 2015 (the "Meeting"). Altacorp Capital Inc. ("Altacorp"), financial advisor to LWI's Board of Directors, has provided an opinion to the Board of Directors that, subject to the assumptions and limitations upon which the opinion is based, the consideration to be received by the Company in the transaction is fair from a financial point of view.
Implementation of the transaction will be subject to shareholder approval at the Meeting. The transaction must be approved by 66?% of shares voted at the Meeting and by majority of the shares voted at the Meeting, excluding votes attached to any shares owned or controlled by Scoular. At the date of this release, Scoular owns a $16.5 million convertible debenture of the Company, but does not own any shares of the Company.
Each of LWI's directors and senior officers that hold common shares in the Company and the Company's largest shareholder group, Mr. Ivan Sabourin, the Ivan Sabourin Family Trust and the Richard and Elaine Sabourin Trust, which collectively hold approximately 15.5% of the outstanding common shares of LWI, have entered into voting support agreements with Scoular and have agreed to vote their common shares in favour of the transaction.
Because Scoular holds a $16.5 million principal amount convertible debenture (which will be repaid out of the proceeds received at closing), it constitutes a related party of LWI for purposes of the Agreement under applicable securities law. Accordingly, the Special Committee retained Deloittes LLP to prepare a formal valuation, a summary or copy of which will be included in a Management Information Circular to be provided to shareholders of LWI in connection with the Meeting.
Subjects
The completion of the transaction is subject to regulatory approval, including approvals required under the Competition Act (Canada), Farm Lands Ownership Act (Manitoba) and The Saskatchewan Farm Security Act and certain other third party consents required for the assignment and transfer of assets and contracts.
The Agreement includes customary non-solicitation, right to match and termination provisions, including termination in the event of a "Superior Proposal" (defined to include, among other events, an unsolicited offer for the purchase of not less than 50% of the shares of the Company which satisfies the requirements set out in the Agreement).
The termination of the Agreement in the event of a Superior Proposal or a failure of shareholders to approve the transaction in the event of a Superior Proposal will trigger the payment by the Company of a $6 million termination fee to Scoular. In addition, the failure of shareholders to approve the transaction in the absence of a Superior Proposal will result in an obligation of the Company to reimburse Scoular for transaction related expenses, subject to a maximum of $950,000.
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