Calgary-based Rocky Mountain Equipment, through a subsidiary, has entered an agreement to purchase all the shares in Manitoba agricultural equipment dealer Chabot Implements for $6.8 million.
A family-owned business started in 1935, Chabot sells Case IH and other brands through locations in Portage la Prairie, Steinbach and Elie. Chabot also handles Kubota, Buhler and various shortlines through its site at Neepawa, Manitoba.
“The acquisition of Chabot represents a significant achievement for Rocky and will be immediately accretive to earnings. Chabot has a long-standing, proud heritage as a premier equipment dealer in Manitoba, having been established nearly 80 years ago. They enjoy a significant sales and service territory, customer base, and this acquisition allows us to more fully consolidate our Case IH distribution in Manitoba,” said Garrett Ganden, the new president and CEO of RME — Canada’s largest Case IH dealer chain.
He noted the acquisition of Chabot “illustrates our continued intention to execute on our strategy of consolidating independent CNH dealers in the Canadian Prairies, where we continue to see opportunity.”
Chabot Implements was founded by Charlie Chabot on his farm near St. Eustache, Manitoba. It was later moved to Elie, before expanding to the existing locations under Bernie and Gilles Chabot.
According to RME, Chabot had top-line revenues of approximately $68 million during its most recent fiscal year (ending December 31st, 2014.) The deal is subject to customary closing conditions, but is expected to close April 1st, 2015.
The acquisition was announced with the release of RME’s four quarter and annual reports on Tuesday. The company saw net earnings of $6.2 million for the quarter ending December 31st, and $18.9 million for the year ending December 31st (up from $15.3 million in 2013.) Revenues on equipment sales, parts and service for the year totalled $965.4 million, down from $1,007.8 million in 2013.
Looking ahead to 2015, Ganden said “we expect that lower commodity prices combined with higher equipment pricing will continue to present a challenging environment for whole goods revenue growth. As was the case last year, Rocky will continue to focus on growing our higher margin product support business to deliver improved earnings.”