Winnipeg grain handling equipment firm Ag Growth has signed a deal to buy another handling gear and storage manufacturer, Union Iron, for US$20.2 million.
Union Iron, based at Decatur, Ill. (southwest of Chicago) makes equipment for commercial and larger farm operations, including bucket elevators, drag conveyors, screw conveyors, truck probes, towers and trusses, distributors, facility load-out equipment and corn degerminators.
Well placed to market its products into the U.S. corn belt, Union Iron’s average annual sales run around US$17.4 million, Ag Growth said in a release Wednesday.
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Ag Growth CEO Rob Stenson said the U.S. firm “captures so many of the product lines we desired to add to our commercial and large-farm grain handling catalogue.”
Union Iron, since 2004, has been developing a line of ring-based temporary grain storage systems and accessories, and that line has shown “substantial” sales growth in that time, Ag Growth noted.
The Winnipeg-based income trust said Union Iron’s products will complement its Hi Roller brand of grain conveyor systems, made at that division’s plant at Sioux Falls, S.D.
The announcement comes a day after Ag Growth announced it would buy a vacant factory at Union City, Ind., for US$850,000.
There, company spokesmen said, the company plans to shorten its U.S. supply chain, tap into a larger available labour force and limit the effects of the stronger Canadian dollar, by assembling products it now builds at its plants in Western Canada to ship to those U.S. markets.
Apart from Hi Roller, Ag Growth’s divisions make grain augers, belt conveyors, bins and grain drying equipment at plants in Alberta, Saskatchewan and Manitoba.
Ag Growth noted that it may pay up to US$3.1 million more for Union Iron if the Illinois firm meets certain targets for earnings before interest, taxes, depreciation and amortization (EBITDA) between now and 2010.
