CPE News (13/30/2020) – Wajax Corporation (TSX: WJX) has entered into a definitive agreement to acquire Tundra Process Solutions Ltd.from owners Iggy Domagalski, Mike Miller, and Dan Peet, for $99.1 million, consisting of $74.6 million in cash and 1,357,142 Wajax common shares.
Calgary based Tundra Process Solutions is a Western Canadian distributor of diverse industrial process equipment for industries such as Oil & Gas, Petrochemical, Mining, Forestry, Municipalities and many others. The company represents industry-leading manufacturers in Artificial Lift, Motors & Drives, Boilers & Water Treatment, Panels & Buildings, Valve & Actuation, Measurement & Analytical, and Service & Support. Tundra also offers a full range of pre-fabricated panels, buildings, equipment, and truck offloading systems.
With approximately 150 employees, Tundra operates four facilities in Alberta: Calgary, Edmonton (2 locations) and Grande Prairie. Tundra also maintains a local sales presence in Fort McMurray and Red Deer, Alberta; Vancouver and Fort St. John, British Columbia; and southern Saskatchewan.
photo credit: Tundra Process Solutions
News Release
WAJAX ANNOUNCES ACQUISITION OF TUNDRA PROCESS SOLUTIONS
Toronto, Ontario – December 30, 2020 – Wajax Corporation (“Wajax” or the “Corporation”) today announced that it has entered into a definitive agreement (the “Definitive Agreement”) to acquire all of the issued and outstanding shares of Calgary, Alberta-based Tundra Process Solutions Ltd. (“Tundra”) for total consideration of $99.1 million.
Pursuant to the terms of the Definitive Agreement, the purchase price for the Tundra shares will be satisfied by the payment in cash of $74.6 million and the issuance of 1,357,142 common shares of Wajax. The value of the Wajax common shares to be issued will be based on the twenty-day volume weighted average trading price of Wajax common shares on the Toronto Stock Exchange (the “TSX”) for the period ending December 29, 2020. The transaction is expected to close early in the first quarter of 2021 and is subject to customary closing conditions, including the approval of the TSX and approval under the Competition Act (Canada), as well as normal post-closing adjustments.
Founded in 1999, Tundra provides maintenance and technical services to customers in the western Canadian midstream oil and gas, oil sands, petrochemical, mining, forestry and municipal sectors. Tundra also distributes a diverse range of industrial process equipment, representing industry-leading manufacturers of valves and actuators, instrumentation and controls, motors and drives, control buildings, boilers and water treatment solutions. Employing approximately 150 people, Tundra operates four facilities in Alberta: Calgary, Edmonton (2 locations) and Grande Prairie. Tundra also maintains a local sales presence in Fort McMurray and Red Deer, Alberta; Vancouver and Fort St. John, British Columbia; and southern Saskatchewan.
Transaction Highlights
• Consistent with Wajax’s strategy, the acquisition of Tundra is expected to provide meaningful growth in the Corporation’s Engineered Repair Services (“ERS”) and industrial parts categories. For the twelve months ended November 30, 2020, Tundra had revenues of approximately $147.8 million;
• Tundra’s operations are complementary to Wajax’s existing ERS and industrial parts businesses, adding extensively to its service offering and product portfolio, and further enhancing the “One Wajax” value proposition as macro tailwinds support the potential for a return to pre-COVID-19 activity levels; and
• The acquisition is expected to be immediately accretive to Wajax shareholders in an anticipated range of $0.10 – $0.15 for the 2021 financial year, on an earnings per share basis.
Concurrent with the signing of the Definitive Agreement and to assist in funding the cash portion of the purchase price for the Tundra shares, Wajax has entered into an agreement with the lenders under its existing credit facilities for a $50.0 million acquisition credit facility. Such acquisition credit facility is for a 24-month term and is on substantially the same terms as the Corporation’s existing credit facilities. The Corporation expects to continue to use cash flow from operations to contribute to debt reduction and to maintain its current quarterly dividend of $0.25 per share.
“We welcome Tundra and its team of dedicated professionals to Wajax,” said Mark Foote, President and Chief Executive Officer of Wajax, “Tundra’s market leadership in process control provides Wajax with meaningful scale in ERS and related industrial parts in western Canada. In central and eastern Canada, Tundra’s technical capabilities and product and service range will provide new opportunities to further extend Wajax’s ERS services to our customers. Our complimentary cultures of safety, customer service and product and service innovation translates into growth driven by a consistent vision of constantly increasing what we can do for our customers.”
Iggy Domagalski, Chief Executive Officer of Tundra, stated, “Partnering with Wajax allows us to instantly grow our volumes by leveraging our combined customer relationships and branch networks. Existing Wajax customers will benefit from a broader range of valve, instrumentation and electrical products and services, and existing Tundra customers will benefit from Wajax’s extensive ERS portfolio and geographic footprint. We are excited to join Wajax and contribute to the goal of becoming Canada’s leading ERS provider.”
PricewaterhouseCoopers LLP and Scotiabank are acting as financial advisors to Wajax in connection with the acquisition. Deloitte Corporate Finance Inc. is serving as financial advisor to Tundra.
Wajax Corporation
Founded in 1858, Wajax (TSX: WJX) is one of Canada’s longest-standing and most diversified industrial products and services providers. The Corporation operates an integrated distribution system providing sales, parts and services to a broad range of customers in diverse sectors of the Canadian economy, including: construction, forestry, mining, industrial and commercial, oil sands, transportation, metal processing, government and utilities, and oil and gas.
The Corporation’s goal is to be Canada’s leading industrial products and services provider, distinguished through its three core capabilities: sales force excellence, the breadth and efficiency of repair and maintenance operations, and the ability to work closely with existing and new vendor partners to constantly expand its product offering to customers. The Corporation believes that achieving excellence in these three areas will position it to create value for its customers, employees, vendors and shareholders.
Additional information, including Wajax’s Annual Report, is available on SEDAR at www.sedar.com.
For further information, please contact:
Mark Foote, President and Chief Executive Officer
Email: mfoote@wajax.com
Stuart Auld, Chief Financial Officer
Email: sauld@wajax.com
Trevor Carson, Vice President, Supply Chain and Corporate Development
Email: tcarson@wajax.com
Telephone #: (905) 212-3300