Strongco Corporation

Strongco Corporation

February 07, 2011 09:52 ET

Strongco Announces Intention to Acquire Chadwick-BaRoss, Inc.

Acquisition Expands Strongco into U.S. Heavy Equipment Market

MISSISSAUGA, ONTARIO--(Marketwire - Feb. 7, 2011) - Strongco Corporation (TSX:SQP) today announced that it intends to acquire 100% of the shares of Chadwick-BaRoss, Inc. for approximately US$11.5 million.

Chadwick-BaRoss is a heavy equipment dealer headquartered in Westbrook, Maine, with three branches in Maine and one in each of New Hampshire and Massachusetts. The transaction is expected to close February 17, 2011, subject to finalizing and executing a purchase and sale agreement, completing due diligence investigations and obtaining certain third party approvals.

"The acquisition is in line with our strategy of building scale, in part by acquiring dealerships closely associated with the major brands represented by Strongco and located in regions that are geographically contiguous with our current markets," said Robert Dryburgh, President and Chief Executive Officer of Strongco. 

Chadwick-BaRoss has been in business in New England for more than 80 years and is a highly regarded Volvo Construction Equipment dealer in Maine and New Hampshire. Strongco operating teams in Quebec and the Atlantic provinces have benefited from a working relationship with Chadwick-BaRoss for several years.

In addition to Volvo products, Chadwick-BaRoss carries a number of complementary brands, including Ponsse and Powerscreen. Through its branch in Chelmsford, Massachusetts, Chadwick-BaRoss also represents other well respected brands such as Takeuchi, Link-Belt and Kawasaki.

The transaction value of approximately US$11.5 million (C$11.4 million) is based on the book value of Chadwick-BaRoss. In connection with the transaction, Strongco has obtained a $5.0 million term loan through its current bank.

"I am particularly pleased that Stuart Welch, who has led Chadwick-BaRoss for several years as President and Chief Executive Officer, has agreed to stay on to lead this business when it becomes part of Strongco," added Mr. Dryburgh. "In particular, he successfully guided the company through the recent recession in the U.S. and I am confident that he and his team are poised to take advantage of the anticipated recovery in heavy equipment markets."

"Given the signs of recovery in the U.S. and current exchange rates, the timing of this acquisition is opportune and enables Strongco to continue to build on our relationship with Volvo and also to establish a platform for future growth," he concluded.

About Strongco

Strongco Corporation is one of Canada's largest multiline mobile equipment dealers. Strongco sells, rents and services equipment used in sectors such as construction, infrastructure, mining, oil and gas, utilities, municipalities, waste management and forestry. Over 500 employees in 26 branches service customers across Canada. Strongco represents leading equipment manufacturers with globally recognized brands, including Volvo Construction Equipment, Case Construction, Manitowoc Crane, Terex Cedarapids, Skyjack, Fassi, Allied, Taylor, ESCO, Dressta and Sennebogen. Strongco is listed on the Toronto Stock Exchange under the symbol SQP.

Forward-Looking Statements

This news release contains "forward-looking" statements within the meaning of applicable securities legislation which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Strongco or industry results, to be materially different from any future results, events, expectations, performance or achievements expressed or implied by such forward-looking statements

All such forward-looking statements are made pursuant to the "safe harbour" provisions of applicable Canadian securities legislation. Forward-looking statements typically contain words or phrases such as "may", "outlook", "objective", "intend", "estimate", "anticipate", "should", "could", "would", "will", "expect", "believe", "plan" and other similar terminology suggesting future outcomes or events. This news release contains forward-looking statements relating to Strongco's intention to acquire the shares of Chadwick-BaRoss, and such statements are based upon the expectations of management.

Forward-looking statements involve numerous assumptions and should not be read as guarantees of future performance or results. Such statements will not necessarily be accurate indications of whether or not such future performance or results will be achieved. You should not unduly rely on forward-looking statements as a number of factors, many of which are beyond the control of Strongco, could cause actual events or results to differ materially from the events or results discussed in the forward-looking statements, including, the inability to finalize a purchase and sale agreement, complete satisfactory due diligence and/or obtain requisite approvals; non compliance with any conditions set out in the finalized purchase and sale agreement including the failure of a party to the agreement to comply with any conditions under the agreement; general economic conditions; business cyclicality, relationships with manufacturers; access to products; competition with existing business; reliance on key personnel; litigation and product liability claims; inventory obsolescence; sufficiency of credit availability; credit risks of customers; warranty claims; technology interpretations; and labour relations. Although the forward-looking statements contained in this news release are based upon what management of Strongco believes are reasonable assumptions, Strongco cannot assure investors that actual performance or results will be consistent with these forward-looking statements. These statements reflect current expectations regarding future events and operating performance and are based on information currently available to Strongco's management. There can be no assurance that the plans, intentions or expectations upon which these forward-looking statements are based will occur. All forward-looking statements in this news release are qualified by these cautionary statements. These forward-looking statements and outlook are made as of the date of this news release and, except as required by applicable law, Strongco assumes no obligation to update or revise them to reflect new events or circumstances.

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