Weyburn Inland Terminal Enters into an Agreement to be Acquired by Parrish & Heimbecker
Friday, 24 January 2014 11:19
WEYBURN, January 24, 2014 /CNW/ – Weyburn Inland Terminal Ltd. (“WIT”), announced today that it has entered into an arrangement agreement (the “Arrangement”) with Parrish & Heimbecker, Limited (“P&H”) whereby P&H will acquire all of the issued and outstanding common shares of WIT for cash consideration of $17.25 per share (the “Transaction”), representing total equity value, on a fully diluted basis, of approximately $94.6 million. WIT’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 late February or early March 2014.
The $17.25 per share consideration represents a 33.7% premium to the closing price on Thursday December 12, 2013, one day prior to WIT’s announcement of its strategic review process, and a 28.3% premium to the highest ever published trading price in WIT’s history prior to the strategic review announcement. The transaction offers all WIT shareholders immediate liquidity at a compelling value. The shares of WIT trade on an over the counter market established by PI Financial Corp.
WIT’s Board of Directors, with the benefit of advice from its financial and legal advisors, have unanimously determined that the Arrangement is in the best interests of WIT 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 the fact that it 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. 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.
“Parrish & Heimbecker is a well-respected, Canadian family-owned business with over 105 years of experience in the Canadian agri-food industry. We believe P&H, with its strong position as Canada’s second largest flour miller consuming over 1 MMT of wheat annually, its 32 line elevators spread across Canada, its supply chain management for logistics through 8 terminal locations on both the west coast and through the Great Lakes / St. Lawrence Seaway, as well as participation in both food and feed manufacturing will be the perfect partner for the next chapter of WIT’s story and a great addition to the Weyburn community” said Rob Davies, CEO of WIT. “The Board of Directors of WIT believes that this agreement is highly attractive to all stakeholders. It offers shareholders a substantial premium and a fully-funded all cash offer. It also brings in a large Canadian operator with an outstanding track record and international export capabilities, ensuring the success of WIT and the local producer community for years to come.”
“We see tremendous potential in WIT and are excited to announce this partnership with south-eastern Saskatchewan producers,” commented John Heimbecker, Vice President of P&H. “WIT will fit very well within P&H’s existing network of grain assets, and the level of service the WIT team provides across its grain, crop inputs, livestock feed and special crops businesses will be welcomed within the P&H family. We expect the proposed acquisition to be beneficial both to producers and the Weyburn community.”
The completion of the Transaction is subject to court approval pursuant to The Business Corporations Act (Saskatchewan) (the “SBCA”), 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 March 31, 2014.
The Arrangement provides for, among other things, a non-solicitation covenant on the part of WIT, subject to customary fiduciary out provisions. P&H will pay a termination fee of $4 million if it terminates the Arrangement for certain reasons. The Arrangement also provides P&H with a right to match a superior proposal for WIT and entitles P&H to a termination fee of $4 million if the Arrangement is terminated in certain circumstances, including if WIT enters into an agreement with respect to a superior proposal or if WIT’s Board withdraws its recommendation with respect to the Arrangement.
Each member of WIT’s Board and its CEO have entered into voting and support agreements pursuant to which they have agreed to vote their WIT shares in favour of the Transaction.
Advisors and Counsel
WIT’s financial advisor is Johnson Advisory Services Inc. and its legal counsel is MacPherson Leslie and Tyerman LLP. Virtus Group Chartered Accountants & Business Advisors LLP provided a fairness opinion to WIT’s Board.
P&H’s financial advisor is CIBC World Markets Inc. and its legal counsel is Borden Ladner Gervais LLP.
WIT is a farmer-owned and farmer-directed grain company located on the CP Rail Soo Line near Weyburn, Saskatchewan. Since its beginning in 1976, ‘The Terminal’ has been at the forefront of change in the industry, leading the way to help improve the overall efficiency of Canada’s grain-handling system. The philosophy and goals of the company are summed up in its mission statement: Profitability Through Service, Innovation and Integrity.
P&H is one of the most diversified agricultural companies in Canada with offices from Vancouver to Halifax and trade links around the world. P&H’s grain business includes trading, handling, marine and rail freight management to domestic and export markets. P&H is the most diversified domestic miller in Canada with flour milling, pea milling and mustard milling as well as a network of feed mills from Alberta to Eastern Ontario. P&H is further integrated into poultry production and food processing. After 105 years in Canada P&H is still a Canadian company, family owned and operated.