Ag Growth International Inc.
TSX : AFN

Ag Growth International Inc.

April 29, 2010 10:11 ET

Ag Growth Announces Strategic Acquisition

WINNIPEG, MANITOBA--(Marketwire - April 29, 2010) - Ag Growth International Inc. (TSX:AFN) ("Ag Growth" or the "Company") today announced the acquisition of 100% of the outstanding shares of Mepu Oy ("Mepu")(www.mepu.fi), a manufacturer of portable and stationary grain drying systems. The purchase price of CAD $11.7 million (8.75 million Euros) will be financed from Ag Growth's cash on hand and represents a valuation of approximately 5.1 times Mepu's trailing twelve month EBITDA and 5.8 times Mepu's average EBITDA over the last three years.

Mepu was established in 1952 and is based in Ylane, Finland. Sales of Mepu's farm level and commercial grain drying systems are concentrated in Finland and Eastern Europe, primarily in the Baltic region and Belarus, and have averaged Euros 14.0 million over the last three fiscal years. "Mepu has experienced consistent growth under the leadership of Arto Sainio", said Rob Stenson, Chief Executive Officer of Ag Growth. "We are thrilled that Arto has agreed to stay in the leadership role for a sufficient period of time to help us manage the transition."

Mr. Stenson continued, "We are very excited to add this profitable and well respected company to the Ag Growth family. Mepu's product line is a strong fit with Ag Growth's existing catalogue and we expect both companies will benefit from the other's distribution network and product offering. In addition, Mepu's geographic location provides our first corporate footprint on the doorstep of growth markets in Eastern Europe and Russia. Mepu's physical presence in this strategically important region will provide a platform for the introduction of our existing farm catalogue into an established dealer network and will complement our commercial equipment strategy in these regions."

Conference Call

Ag Growth will hold a conference call on Friday, April 30, 2010, at 11:00 A.M. EST to discuss the acquisition. To participate in the conference call, please dial 1-866-226-1792 or for local access dial 416-340-2216. An audio replay of the call will be available for seven days. To access the audio replay, please dial 1-800-408-3053 or for local access dial 416-695-5800. Please quote confirmation code 5450284.

Company Profile

Ag Growth is a leading manufacturer of portable and stationary grain handling, storage and conditioning equipment, including augers, belt conveyors, grain storage bins, grain handling accessories and grain aeration equipment. Ag Growth's sales, marketing, and distribution system is comprised of approximately 1,400 dealers and distributors that distribute product in 48 states, nine provinces, and overseas.

Non-GAAP measures

References to "EBITDA" are to earnings before interest, income taxes, depreciation and amortization. Management believes that, in addition to net income or loss, EBITDA is a useful supplemental measure in evaluating the Company's performance. EBITDA is not a financial measure recognized by GAAP and does not have a standardized meaning prescribed by GAAP. Management cautions investors that EBITDA should not replace net income or loss as indicators of performance, or cash flows from operating, investing, and financing activities as a measure of the Company's liquidity and cash flows. Ag Growth's method of calculating EBITDA may differ from the methods used by other issuers.

Forward-Looking Statements

This press release contains forward-looking statements that reflect our expectations regarding the future growth, results of operations, performance, business prospects, and opportunities of the Company. Forward-looking statements may contain such words as "anticipate", "believe", "continue", "could", "expects", "intend", "plans", "will" or similar expressions suggesting future conditions or events. In particular, the forward looking statements in this press release include statements relating to the benefits of the acquisition to our business and strategy, including growth in sales to developing markets, the impact of crop conditions in our market areas, the impact of current economic conditions on the demand for our products, our working capital and capital expenditure requirements, capital resources and the payment of dividends. Such forward-looking statements reflect our current beliefs and are based on information currently available to us, including certain key expectations and assumptions concerning anticipated financial performance, business prospects, strategies, product pricing, regulatory developments, tax laws, the sufficiency of budgeted capital expenditures in carrying out planned activities and the cost of labour and services. Forward-looking statements involve significant risks and uncertainties. A number of factors could cause actual results to differ materially from results discussed in the forward-looking statements, including changes in international, national and local business conditions, crop yields, crop conditions, seasonality, industry cyclicality, volatility of production costs, commodity prices, foreign exchange rates, and competition. In addition, actual results may be materially impacted by the pace of recovery from the recent economic downturn, including the cost and availability of capital and the possibility of deterioration in the Company's working capital position. These risks and uncertainties are described under "Risks and Uncertainties" in our MD&A for the year ended December 31, 2009 and in our most recently filed Annual Information Form. Although the forward-looking statements contained in this press release are based on what we believe to be reasonable assumptions, we cannot assure readers that actual results will be consistent with these forward-looking statements and we undertake no obligation to update such statements except as expressly required by law.

Contact Information

  • Ag Growth International Inc.
    Steve Sommerfeld
    Investor Relations
    204-489-1855
    steve@aggrowth.com