Sun Gro agrees to friendly takeover
Jan. 17, 2011, Vancouver – Sun Gro Horticulture Inc., formerly Sun Gro
Horticulture Income Fund , yesterday announced it has entered into a
support agreement with IKO Enterprises Ltd., a privately held Canadian
manufacturing and distribution company with operations throughout North
America and Europe.
Jan. 17, 2011, Vancouver – Sun Gro Horticulture Inc. , formerly Sun Gro Horticulture Income Fund , yesterday announced it has entered into a support agreement with IKO Enterprises Ltd. , a privately held Canadian manufacturing and distribution company with operations throughout North America and Europe.
Pursuant to the Support Agreement, IKO has agreed, subject to certain conditions, to make an offer to acquire all of the issued and outstanding common shares of Sun Gro, other than shares held by IKO and its affiliates and joint actors, for a price per share of $6.60 Cdn in cash. IKO and its affiliates and joint actors currently own or control approximately 19 per cent of Sun Gro's outstanding shares.
The $6.60 cash price per share under the offer represents a premium of 56 per cent over the volume-weighted average trading price for Sun Gro units for the 20 days prior to Sept. 7, 2010, the date that Sun Gro announced its intention to form a special committee and seek strategic alternatives, and a 28 per cent premium over the 20-day volume-weighted average trading price prior to the date of this announcement.
The offer will be effected by way of a takeover bid. Full details will be contained in a formal offer and takeover bid circular, which is expected to be mailed to Sun Gro shareholders over the next few weeks. The transaction is expected to close in March 2011. The offer will be subject to certain customary conditions, including a condition that the number of shares tendered into the offer and not withdrawn, together with the shares held by IKO and its affiliates and joint actors, equals at least 66-2/3 per cent of the total number of outstanding Sun Gro shares.
The proposed sale of Sun Gro to IKO follows the formal review of strategic alternatives commenced by Sun Gro in September 2010 in order to enhance shareholder value.
"We are satisfied that the transaction with IKO results in the best value available to our shareholders," said Mitch Weaver, president and CEO of Sun Gro and a member of its board of directors. The board has unanimously determined that the offer is fair to Sun Gro shareholders and is in the best interests of Sun Gro and its shareholders. The board has received an opinion from Blair Franklin Capital Partners Inc. that the consideration to be received under the offer is fair, from a financial point of view, to Sun Gro shareholders, other than IKO and its affiliates and joint actors. All members of the board intend to tender all shares that they own to the Offer.
"We are very pleased to be increasing our ownership interest in Sun Gro," said Derek Fee, IKO's manager of corporate communications, "and look forward to building on this outstanding company's more than 80 years of leadership and innovation in the growing media industry."
The IKO group of companies is a global leader in the manufacture and supply of commercial and residential roofing, waterproofing, and insulation board products. Founded in Calgary, Alberta in 1951, the family owned business has grown to include more than 20 manufacturing plants and 3,000 employees worldwide.
ABOUT SUN GRO
Sun Gro is the largest producer and distributor of peat and bark-based growing mixes to professional plant growers in the U.S. and Canada. It is also North America's largest producer and distributor of sphagnum peat moss, with approximately 65,000 acres of peat bogs under lease. Sun Gro sells its professional products primarily to greenhouse, nursery and specialty crop growers. The company also sells peat moss and potting mixes to retail customers, either by way of private label partnerships or under its own brand names. In addition, Sun Gro sells sand-based mixes to golf course developers and landscapers. The company's North America-wide production network now comprises 12 Canadian plants and 13 US plants.