CWB to acquire Great Sandhills Terminal
June 24, 2014
by World Grain Staff
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WINNIPEG, MANITOBA, CANADA — The Great Sandhills Terminal Ltd. (GST) board of directors and Canadian Wheat Board (CWB) announced on June 23 that they have entered into an agreement whereby CWB will acquire, through a wholly-owned subsidiary, all of the issued and outstanding common shares of GST for cash consideration of C$581.98 per share (subject to adjustment in certain circumstances), representing total equity value, on a fully diluted basis, of C$17,426,227 (subject to adjustment in certain circumstances).
The transaction offers all GST shareholders liquidity for their GST shares at compelling value. GST's board will mail a management information circular containing additional details of the transaction in the upcoming weeks to its shareholders for approval at a meeting expected to be held in August.
GST's board of directors have unanimously determined that the arrangement is in the best interests of GST and recommend that shareholders vote in favor of the transaction. In making this recommendation the board of directors considered a number of benefits of the transaction, including CWB's access to export markets and its significant grain marketing experience, which will provide a strong, local competitive option for GST farm customers.
"Today's agreement brings together the strong reputations of both companies under one roof," said Wayne Hittel, chairman of Great Sandhills Terminal. "CWB's prized international brand and GST's service excellence are just two of the reasons this acquisition is a win-win for all stakeholders — CWB, GST shareholders, our local community, and all of our farmer-customers that deliver grain to GST now and in the future."
"CWB and Great Sandhills Terminal have worked very well together for many years providing farmers with valuable marketing options," said CWB president and Chief Executive Officer Ian White. "We look forward to providing an even stronger value proposition to farmers as a single company. This purchase strengthens CWB's growing network of assets across Western Canada and provides the opportunity for an ongoing farmer ownership stake in GST through our Farmer Equity Plan."
The agreement with Great Sandhills Terminal complements CWB's recent acquisition of Prairie West Terminal by expanding CWB's country assets in western Saskatchewan to include GST's high-throughput grain handling facility near Leader, Saskatchewan and a majority stake in Great Sandhills Railway — a shortline railway operating 197 kilometers of track between Swift Current and Burstall, Saskatchewan.
The completion of the transaction is subject to court approval pursuant to The Business Corporations Act (Saskatchewan), and the approval of two-thirds of the votes cast by shareholders present in person or by proxy at the special meeting of shareholders. The transaction is also subject to customary closing conditions for a transaction of this nature, including receipt of all regulatory approvals, and is expected to close before Sept. 1.
The arrangement provides for, among other things, a non-solicitation covenant on the part of GST, subject to customary fiduciary out provisions. CWB will pay a termination fee of C$800,000 if it terminates the arrangement for certain reasons. The arrangement also provides CWB with a right to match a superior proposal for GST and entitles CWB to a termination fee of C$800,000 if the arrangement is terminated in certain circumstances, including if GST enters into an agreement with respect to a superior proposal or if GST's board withdraws its recommendation with respect to the arrangement.