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Ag Growth International Inc. AFN-T confirmed on Wednesday it rejected a recent takeover offer, and the farm equipment manufacturer’s share price soared on the prospect of further bids.

Late Tuesday, The Globe and Mail reported Winnipeg-based AGI turned down an offer from an industry rival priced at a 35-per-cent-plus premium to the company’s stock price.

On Wednesday, AGI said in a press release that its board, working with investment bankers and lawyers, “thoroughly considered” a recent bid and decided it was not in the best interest of the company or its shareholders.

AGI described the takeover offer as ”an unsolicited, non-binding and conditional proposal.” The company said it “is not in discussions with any third party, nor is there any agreement, understanding or arrangement with respect to any proposal.”

AGI’s share price jumped by 15 per cent early Wednesday on the Toronto Stock Exchange on anticipation of further takeover offers. The company has a $987-million market capitalization, which makes it a mid-tier player in an agricultural industry dominated by far larger manufacturers. AGI stock closed at $51.08, up 11 per cent from the previous day.

Prior to Wednesday’s gains, AGI’s share price declined by 25 per cent over the past four weeks, after the company announced weaker-than-expected quarterly results on April 29. Analysts said the slump reflected concerns the sector faces a cyclical downturn, with U.S. farmers spending less than expected on equipment.

In the first three months of the year, AGI’s revenues were $315-million, down 9 per cent from the same period in 2023.

Last year AGI sold $1.5-billion of crop storage, handling and processing equipment to farmers and commercial customers, such as food processors and terminal operators.

Prior to news of the takeover, investors valued AGI shares at a significant discount to those of rivals. In a report published on Wednesday, analyst Andrew Wong at RBC Capital Markets said AGI stock traded at six times the company’s forecast earnings before interest, taxes, depreciation and amortization (EBITDA) in 2024. This is well below AGI stock’s historic multiple of eight times EBITDA and an average 9.5 times multiple to EBITDA at publicly traded agricultural equipment peers.

“We view the reported bid as opportunistic given shares have traded off about 25 per cent since first-quarter results,” Mr. Wong said. AGI shares are widely held, with no single investor owning more than 10 per cent of the company.

AGI’s publicly traded peers include Duluth, Ga.-based AGCO Corp. AGCO-N, with a US$7.9-billion market capitalization; John Deere parent Deere & Co. DE-N, which has a US$103-billion capitalization; and Europe’s CNH Industrial NV, which is controlled by Italy’s Agnelli family and valued at US$13.4-billion.

Founded in 1994 with a focus on selling to North American farmers, AGI expanded through acquisitions and now sells to customers in Asia, Australia, Europe and South America. The company runs 30 factories across Canada and in the United States, Brazil, India, France and Italy.

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