- C$1,200 million cash purchase
price
- Transaction is expected to be immediately accretive to
earnings per share and free cash flow per share
- Prudent pro forma leverage of 1.7x net debt to trailing
EBITDA and well within target leverage parameters
GUELPH, ON, Dec. 14, 2017 /CNW/ - Linamar Corporation
(TSX:LNR) today announced that it has entered into a definitive
agreement to acquire 100% of the outstanding equity interests of
MacDon and its Group of Companies for an aggregate purchase price
of C$1,200 Million, less the
assumption of small transaction related expenses, and subject to
certain customary adjustments (the "Transaction"). Headquartered in
Winnipeg, Manitoba, Canada, MacDon
is a global innovative market leader in the design and
manufacturing of specialized agriculture harvesting equipment such
as drapers and self-propelled windrowers.
MacDon is an industry-leading manufacturer with a strong
customer following and advanced agriculture equipment
technologies. It has developed an indstury-leading reputation
for quality, reliability and passion for harvesting technology over
its 67 year history as a family owned company. MacDon's mission is
to manufacture reliable machines that make harvesting easier and
more productive for its customers in over 40 countries worldwide.
MacDon's products excel in the toughest real-world conditions, and
its pioneering, industry-leading innovations like the FlexDraper®
have propelled the company's strong reputation for providing
customers with quality, innovative equipment. Further, MacDon has
developed strong relationships with a global dealer network of
approximately 1,400 leading dealers and distributors, a major
competitive advantage in the industry. Linamar sees a compelling
cultural fit with MacDon given its strong family legacy and looks
forward to building on that foundation, which has been a key driver
of MacDon's success. This platform acquisition positions Linamar as
a leading global agricultural equipment manufacturer.
MacDon will be combined with Linamar's existing agriculture
harvesting business in Hungary to
position both businesses for significant growth. Linamar's existing
harvesting business is highly complementary to MacDon product plan
allowing Linamar to offer a full lineup of grain and hay harvesting
equipment. Linamar plans to expand its agricultural platform
by increasing penetration in both new and underserviced markets
globally. Linamar expects to realize modest synergies from the
Transaction and create opportunities to utilize existing
distribution channels for agricultural products. The Transaction is
expected to be immediately accretive to earnings per share and free
cash flow per share even before accounting for these synergies. As
it expands, MacDon will benefit from Linamar's established
manufacturing footprint in Asia
and Europe along with employing
best practices from both Linamar and MacDon.
Linamar has a long track record of executing strategic,
accretive acquisitions followed by seamless integration. Its
previous acquisitions of Skyjack, Montupet and Seissenschmidt are
compelling case studies of Linamar building its global
manufacturing platform with broader product lines, additional
capabilities in new markets and incremental geographic presence,
while continuing to deliver outstanding financial performance and
returns to its shareholders.
"The acquisition of MacDon provides a truly once-in-a-lifetime
opportunity to move our agriculture business into a market leading
position while providing meaningful diversification to the end
markets we serve. We believe the long-term growth fundamentals for
the agriculture industry are very strong given the growing and
developing global population, noting the market is in the early
stages of cyclical recovery." said Linda
Hasenfratz, Linamar's CEO, "MacDon is a strong, well-managed
company and an innovative market leader in both customer
penetration and technology evolution; it will be the centerpiece of
our agriculture business, which includes our existing European corn
header business, highly complementary to MacDon products. We
get diversification, innovation, growth and a solid deal, we
couldn't be happier."
Financing and Additional Transaction Details
In connection with the Transaction, Linamar also announced today
that it will amend its credit facilities. The credit facilities
will be amended as follows. A new term loan facility will be added
to fund the acquisition in the amount of a C$1,200 million under similar terms and
conditions as Linamar's existing credit facilities. (i) The
existing term loan of $572 million
will continue under the current terms and conditions and (ii) the
continuation and increase of the previously existing revolving
credit facility to the aggregate principal amount of up to
$1,150 million (the "Revolving
Facility") to fund general corporate purposes. Both the new Term
Facility and the Revolving Facility will mature five years
following the closing of the amendment, expected to be in
January 2023 and are under terms and
conditions largely consistent with Linamar's previously existing
credit facilities. These credit facilities and amendments have been
fully underwritten by commitments of BMO Capital Markets, TD and
Scotiabank. At closing, Linamar's net debt to EBITDA ratio is
expected to be approximately 1.7x, well within Linamar's target
leverage parameters with pro forma cash flow expected to allow for
rapid debt repayment going forward.
The Transaction is subject to customary regulatory approvals and
expected to close in the first quarter of 2018. BMO Capital Markets
and TD Securities are acting as financial advisors to Linamar in
connection with the Transaction. Blake, Cassels & Graydon LLP
(Blakes) was retained as legal counsel for Linamar.
Linamar will hold a webex conference call on December 14, 2017, at 4:30
p.m. ET to discuss the Transaction in greater detail. The
number for the call is toll free 1-888-424-9894 or 1-647-427-3383
Conference ID 4167926. The link for the webex is
https://linamar2020.webex.com/meet/Executive. Password is
"Linamar1". The conference call will be chaired by
Linda Hasenfratz, Linamar's Chief
Executive Officer.
A copy of this press release will be available on Linamar's
website after 4:00 p.m. ET on
December 14, 2017 and at
www.sedar.com by the start of business on December 15, 2017. A taped replay of the
conference call will also be made available starting at
7:00 p.m. on December 14, 2017 for ten days. The number for
replay is 1-855-859-2056 Conference ID 4167926.
Linamar Corporation (TSX:LNR) is a diversified global
manufacturing company of highly engineered products powering
vehicles, motion, work and lives. The Company is made up of 2
operating segments – the Powertrain/Driveline segment and the
Industrial segment, which are further divided into 5 operating
groups – Machining & Assembly, Light Metal Casting, Forging,
Skyjack and Agriculture, all world leaders in the design,
development and production of highly engineered products. The
Company's Machining & Assembly, Light Metal Casting and Forging
operating groups focus on precision metallic components, modules
and systems for powertrain, driveline and body systems designed for
global electrified and traditionally powered vehicle and industrial
markets. The Company's Skyjack and Agriculture operating groups are
noted for their innovative, high quality mobile industrial
equipment, notably its class-leading aerial work platforms,
telehandlers and agricultural equipment. With more than 25,700
employees in 59 manufacturing locations, 6 R&D centers and 21
sales offices in 17 countries in North and South America, Europe and Asia, Linamar generated sales of $6.0 billion in 2016. For more information about
Linamar Corporation and its industry leading products and services,
visit www.linamar.com or follow us on Twitter at @LinamarCorp.
Forward Looking Information, Risk and Uncertainties
Certain information provided by Linamar in this press release,
MD&A, the consolidated financial statements and other documents
published throughout the year which are not recitation of
historical facts may constitute forward-looking statements. The
words "may", "would", "could", "will", "likely", "estimate",
"believe", "expect", "plan", "forecast" and similar expressions are
intended to identify forward looking statements. Readers are
cautioned that such statements are only predictions and the actual
events or results may differ materially. In evaluating such
forward-looking statements, readers should specifically consider
the various factors that could cause actual events or results to
differ materially from those indicated by such forward-looking
statements.
Such forward-looking information may involve important risks and
uncertainties that could materially alter results in the future
from those expressed or implied in any forward-looking statements
made by, or on behalf of, Linamar. Some of the factors and risks
and uncertainties that cause results to differ from current
expectations include, but are not limited to, changes in the
competitive environment in which Linamar operates, OEM outsourcing
and insourcing; sources and availability of raw materials; labour
markets and dependence on key personnel; dependence on certain
customers and product programs; technological change in the sectors
in which the Company operates and by Linamar's competitors; delays
in or operational issues with product launches; foreign currency
risk; long-term contracts that are not guaranteed; acquisition and
expansion risk; foreign business risk; cyclicality and seasonality;
capital and liquidity risk; legal proceedings and insurance
coverage; credit risk; emission standards; tax laws; securities
laws compliance and corporate governance standards; fluctuations in
interest rates; environmental emissions and safety regulations;
trade and labour disruptions; world political events; pricing
concessions to customers; and governmental, environmental and
regulatory policies.
The foregoing is not an exhaustive list of the factors that may
affect Linamar's forwarding looking statements. These and other
factors should be considered carefully and readers should not place
undue reliance on Linamar's forward-looking statements. Linamar
assumes no obligation to update the forward-looking statements, or
to update the reasons why actual results could differ from those
reflected in the forward-looking statements.
SOURCE Linamar Corporation