Equipment dealer chain Rocky Mountain to go private

Publicly traded CNH dealer's top brass make offer

Canada’s biggest farm equipment dealership chain has made a deal to take itself private after almost 13 years on the TSX.

Rocky Mountain Dealerships (RME) announced Monday it has an agreement in place with a numbered Alberta company controlled by CEO Garrett Ganden and board chairman Matthew Campbell, for 100 per cent of RME at $7 per share, or $120.8 million for all shares the numbered company doesn’t already control.

The offer values Calgary-based RME, whose holdings today include 36 dealerships in Alberta, Saskatchewan and Manitoba, at $135 million on an equity basis and $188 million on an enterprise basis, including debt and lease obligations.

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The deal, subject to the usual approvals and conditions, is expected to close on or around Dec. 21, RME said, after which RME’s shares would be delisted from the TSX.

The chain is made up mainly of Case IH farm equipment dealers, though seven deal partly or entirely in New Holland farm equipment and eight partly or entirely in Case construction equipment.

A committee of independent directors has “unanimously” recommended the deal to the board, and “certain directors and officers” including Ganden and Campbell have already agreed to vote their combined 13.6 per cent stake in favour of the deal.

Other shareholders are expected to get an information package on the deal this month, followed by a special meeting, either in person or online, on or around Dec. 18 to vote on the deal.

The agreement also includes a 35-day “go-shop” period, ending Dec. 6, in which RME can seek out, evaluate and/or negotiate with other parties interested in mounting competing bids.

The going-private deal follows what Ganden described on Friday as a round of “aggressive cost and inventory reduction initiatives” for RME in the last half of 2019.

“While demand has not rebounded from 2019 levels the way we originally anticipated, we believe… RME’s cost structure and inventory levels are more appropriate for the current market,” he said in reporting the company’s third-quarter results Friday.

Given “ongoing economic uncertainty” due to the COVID-19 pandemic as well as “unresolved international trade relations,” RME will continue to “focus on and fortify our balance sheet position,” he said.

Industry data show deliveries of new units of large-horsepower equipment and self-propelled combines in Canada still at historic lows, he said, but crop reports are “encouraging” with harvest now largely complete and crop prices up by five to 19 per cent from January 2019 levels.

RME booked gross sales of $200.99 million in its third quarter ending Sept. 30, up 9.2 per cent from the year-earlier period. Year-to-date sales came in at $548.55 million, down 1.4 per cent from the first three quarters of 2019.

RME’s year-to-date net earnings up to Sept. 30 sit at $5.39 million, up from a $2.41 million net loss in its first three quarters of 2019. — Glacier FarmMedia Network

About the author

Editor, Daily News

Dave Bedard

Editor of Daily News for the Glacier FarmMedia Network. A Saskatchewan transplant in Winnipeg.

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