REGINA, SASKATCHEWAN, CANADA — AGT Food and Ingredients Inc. (AGT) announced on Oct. 5 that it has signed an agreement to acquire short-line rail operator Mobil Capital Holdings Ltd. (Mobil) and its subsidiaries.
Mobil, based in Saskatchewan, Canada, is an agricultural processor and exporter operating short-line railways from Regina to Saskatoon and from Saskatoon to the Alberta border. In 2005, it introduced an automated, high-volume, modular grain processing plant. The company has recently expanded its scope from specialty pulse crops to include a broad range of crops.
The total purchase price of the transaction is C$57.5 million including the issuance of C$19 million of common shares in the capital of AGT (being 722,803 common shares) and a C$19.5 million promissory note repayable in equal installments for a period of five years following the completion of the transaction. The transaction is subject to various closing conditions and AGT expects the transaction to be completed in the fourth quarter of 2015.
“This is an exciting follow-on acquisition to our previously completed investment in bulk loading and handling assets of West Central Road and Rail announced in June 2015,” Murad Al-Katib, president and chief executive officer of AGT. “Our North America legacy pulses business has been trending positively both on margin and asset utilization, warranting us to continue our investments in Canada, augmenting pulses capacity while adding the ability to solidify our durum wheat origination and supply chain for our growing pasta and bulgur wheat business.
“Rail transportation and loading infrastructure are essential elements to the competitiveness of our legacy segment, especially in the current global supply and demand environment. The ability to control our logistics chain with ownership of rail logistics assets and short line rail infrastructure and equipment servicing our handling assets, we feel, allows AGT to create a competitive advantage over time. Efficient transportation modes ensure the smooth movement of products, matching origination and production to demand and supply requirements from farm to customer. We feel we will continue to be very competitive in this way and this acquisition assists us in meeting this objective, allowing us to continue growing shareholder value with the growth of our business.”