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Publicly traded Rocky Mountain Dealerships Inc. says it has struck a deal with its chairman and CEO through which it will become a private company.

A numbered company controlled by chairman Matthew Campbell and chief executive Garrett Ganden has agreed to pay $7 each for the shares they don’t currently own, the Calgary-based firm said on Monday.

The arrangement values the company, which says it is the largest farm equipment dealer in Canada with 36 locations in Alberta, Saskatchewan and Manitoba, at $135-million (or $188-million including debt and lease obligations and excluding floor plan payables).

While reporting third-quarter financial results last week, Mr. Ganden said Rocky Mountain is focusing on strengthening its balance sheet despite the recent above-average Canadian harvest in view of continuing uncertainty surrounding the COVID-19 pandemic and trade disputes.

“Canadian industry data indicates the delivery of new units of large horsepower equipment and self-propelled combines remain at historic lows,” he said in a news release.

“However, crop reports are encouraging, showing the harvest is essentially complete and ahead of historical averages across our territory, while crop prices are now 5 to 19 per cent higher than in January, 2019.”

The company reported that sales rose 9.2 per cent to $201-million in the three months ended Sept. 30 compared with the same period of 2019, delivering net earnings of $4.6-million compared with a loss of $116,000.

Rocky Mountain says the buyout price represents a 26.8-per-cent premium to its closing price on Friday – the stock rose by 25 per cent to $6.90 by noon in Toronto on Monday.

Directors and officers who own or control about 13.6 per cent of the shares have agreed to support the arrangement, it said. The deal requires two-thirds support at a special meeting to be held in December to go forward.

The company says it is allowed to actively negotiate with other potential buyers until Dec. 6, although it has agreed to pay a break fee of $2.575-million if the deal is ended before that date and $5.15-million afterward.

It says the transaction has been endorsed by a special committee of independent directors formed to assess the fair market value of the shares and evaluate the proposal.

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