Regina-based AGT Food and Ingredients has announced an agreement to purchase Mobil Capital Holdings Ltd., the parent company of Mobil Grain, for $57.5 million.
The price includes the issuance of $19 million of common shares in AGT and a $19.5 million promissory note.
Founded by Lavern and Sheldon Affleck, Mobil specializes in operating a modular-designed, moveable grain processing plant, as well as two short-line railways in Saskatchewan: Big Sky Rail and Last Mountain Railway. The company, through its subsidiaries, also conducts bulk commodity transloading and trades pulses and grains in Saskatchewan and Ontario.
The acquisition comes on the heels of AGT’s purchase of West Central Road and Rail earlier this year.
“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,” said AGT president and CEO Mr. Murad Al-Katib in a statement.
“Rail transportation and loading infrastructure are essential elements to the competitiveness of our legacy segment, especially in the current global supply and demand environment,” he continued. “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.”
AGT does not expect any significant change in Mobil’s operations, including “business as usual” for the processing branch.
The deal is still subject to various approvals. AGT expects the transaction will be completed in the fourth quarter of 2015.
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