Grain handler Parrish and Heimbecker plans to buy its way further into southeastern Saskatchewan’s grain handle with a $94.6 million all-cash deal for farmer-owned Weyburn Inland Terminal.
Winnipeg-based P+H on Friday announced an “arrangement agreement” with WIT in which the grain firm would buy up all WIT’s issued and outstanding shares for $17.25 each, about 33.7 per cent above the shares’ closing price on Thursday and 28.3 per cent over WIT’s record share value in the over-the-counter (OTC) market.
The proposed deal — which still needs at least two-thirds approval from WIT shareholders at a meeting to be held sometime late next month or in early March, as well as court and regulatory approval — “offers all WIT shareholders immediate liquidity at a compelling value,” WIT said in a release.
The two companies expect to close their deal before the end of March.
Under their arranagement, one company will get a $4 million termination fee if the other backs out of the deal — for example, if a “superior proposal” for WIT were to appear from some other buyer, or if WIT’s board were to withdraw its support for the deal.
WIT’s board said Friday it has unanimously agreed the deal with P+H is “in the best interests” of WIT and it recommends shareholders vote to accept the offer.
The agreement may not get a warm welcome from all WIT shareholders.
After WIT’s board announced its plans last month to pursue options such as a sale, two directors quit the board and a shareholder group sprung up online, urging the board to call a shareholders’ meeting and consider other options besides a sale to improve share liquidity.
WIT’s board said Friday the P+H deal “meets its two previously stated key objectives of maximizing value and liquidity for WIT shareholders, and providing a strong competitive environment for WIT’s customers as the company’s business environment continued to evolve.”
Furthermore, WIT said, “the connection with P+H’s export markets and large base of Canadian flour mills will provide a strong, local competitive option for farm customers.”
Given P+H’s position as Canada’s second largest flour miller using over one million tonnes of wheat per year; its 32 elevators across Canada; its supply chain management through eight West Coast and Great Lakes/St. Lawrence terminals; and its stakes in food and feed processing, the company is believed to be “the perfect partner for the next chapter of WIT’s story and a great addition to the Weyburn community,” WIT CEO Rob Davies said in the company’s release.
“We see tremendous potential in WIT and are excited to announce this partnership with southeastern Saskatchewan producers,” P+H vice-president John Heimbecker said in the same release, adding the company expects WIT and its staff “will fit very well within P+H’s existing network of grain assets.”
P+H, founded by the grain-trading Parrish and Heimbecker families in 1909, remains family-owned and privately-held. Its most recent grain handling play before Friday’s announcement was a deal with Cargill last May for joint ownership and operation of that company’s Thunder Bay port terminal.
P+H’s grain elevator network in southeastern Saskatchewan already includes facilities at Yorkton, Moosomin and Langbank (about 160 km northeast of Weyburn). Its nearby network also includes an elevator at Glossop Siding near Strathclair, Man., about 90 km northwest of Brandon.
Founded by local farmers in 1976, WIT today runs a 105,490-tonne capacity grain terminal near Weyburn; retail facilities for seed, chemicals and fertilizer; and its Pro-Pellets facility, which can produce about 10 tonnes of feed pellets per hour.
The company’s holdings also include stakes in Vancouver’s Alliance Grain Terminal, Weyburn-area ethanol processor NorAmera BioEnergy and seed company Alliance Seed Corp.
In its last full fiscal year ending Dec. 31, 2012, WIT booked net earnings attributable to WIT shareholders of $2.08 million on $150.4 million in revenues, up from a $246,000 loss attributable to shareholders on $109.3 million in revenues in 2011.
The deal with P+H comes in the wake of the federal government’s 2012 deregulation of the Canadian Wheat Board’s single marketing desk for Prairie wheat and barley. WIT, in its recent third-quarter financials, said the new grain marketing environment “has reduced some revenue streams” for the company.
WIT, in the Q3 report, also noted its grain, special crop and livestock feed pelleting operations have come back to “more normal levels of crop production in 2012 and 2013 after two years of reduced volumes due to flooding.” — AGCanada.com Network
Farmer-owned Sask. terminal’s potential sale questioned, Jan. 9, 2014
Two Weyburn Terminal directors quit as sale eyed, Dec. 17, 2013
P+H in talks for Owen Sound port, Sept. 17, 2013
Great Lakes grain handler surrenders to hostile takeover, July 6, 2012