WINNIPEG, MANITOBA, CANADA — Ag Growth International Inc. (AGI) announced on March 9 the acquisition of Entringer S.A., a Brazilian-based manufacturer of grain bins, bucket elevators, dryers and cleaners. Founded in 1988 and strategically located in Brazil's Sao Paulo province, Entringer provides AGI with a measured entry into the rapidly expanding agricultural sector in Brazil, AGI said.

"We are very pleased to announce the acquisition of Entringer," said Tim Close, president and chief executive officer of AGI. "Despite the economic and political turmoil in Brazil, the agriculture sector has remained a positive point for the country. The issues facing the country have had a substantial impact on the currency, creating what we believe to be an opportunistic time to enter the market and establish a platform for growth."
Entringer sales in 2015 were R$43 million ($11,729,678) and normalized EBITDA over the previous six years has averaged approximately R$5.6 million, with peak normalized EBITDA of R$9.9 million in 2013 and negative EBITDA of approximately R$1.3 million in 2015. Terms of the transaction included payment of R$30 million upon closing which represents a multiple of 5.4 times against the previous six year average EBITDA. The agreement includes a R$15 million earn-out provision based on Entringer meeting certain EBITDA thresholds.
"The Brazilian agriculture market continues to gain momentum as the soy and corn crops benefit from double cropping and as new acres are converted to grain, new seed technology is deployed and producers make better use of fertilizer to impact crop yields,” Close said. “Brazil has a substantial deficit in the infrastructure and equipment required to properly store, condition, and handle the growing grain crop. The combination of the growing crop and the lack of infrastructure create an excellent market for AGI. Historically, taxes and tariffs that exist in Brazil have restricted our ability to compete in this exciting market and with today's announcement we now have manufacturing capabilities within Brazil. This expanding footprint is a continuation of our global growth strategy and forms a key element of our efforts to mitigate the risks inherent from the variability of regional events in agriculture."
"The acquisition of Entringer marks the beginning of what we have termed our ’Greenfield Plus’ strategy to grow our business in Brazil,” Close said. “With Entringer, we are acquiring a Brazilian focused product line including grain dryers and grain cleaners which are new to AGI, an excellent team with an established track record of outstanding customer service, installation capabilities, a distribution network, customer relationships, an excellent operations team, a robust pipeline, and well situated land for a greenfield facility."
"We have spent more than three years developing and pursuing a measured and responsible strategy to enter the Brazilian market,” Close said. “The combination of a small acquisition which provides the products and people required to grow our local business along with the construction of a new, state of the art facility provides a truly unique strategic position in the Brazil marketplace. While the impact on 2016 EBITDA will be marginal, we will spend approximately $25 million to establish a new facility and we expect this facility to contribute starting in 2017."