AgJunction Inc. (TSX:
AJX) ("
AgJunction"), a global provider of
advanced guidance, autosteering, and autonomy solutions for
precision agriculture applications, today announced that it has
entered into a definitive arrangement agreement (the
"
Arrangement Agreement") to be acquired by KUBOTA
Corporation ("
Kubota" or the
"
Purchaser"), a corporation headquartered in
Osaka, Japan, in an all-cash transaction with a total equity value,
on a fully diluted basis, of approximately CAD $91 million.
Under the terms of the Arrangement Agreement,
Kubota will acquire AgJunction for CAD $0.75 per common share (the
"Purchase Price"), representing a premium of
approximately 60% to the closing price of the common shares on the
Toronto Stock Exchange ("TSX") on October 7, 2021,
the last trading day prior to this announcement, and a 59% premium
to AgJunction’s 30 day volume-weighted average share price on the
TSX. The proposed transaction (the "Transaction")
is to be completed by way of a plan of arrangement under the
Business Corporations Act (Alberta).
The board of directors of AgJunction (the
"Board"), based on the unanimous recommendation of
its special committee of independent directors (the
"Special Committee"), receipt of the Fairness
Opinion (as defined below) and after consultation in its evaluation
of the Transaction with legal and financial advisors, has: (i)
unanimously approved the Arrangement Agreement, (ii) unanimously
determined that the Transaction is fair to AgJunction shareholders
and is in the best interests of AgJunction, and (iii) unanimously
recommends that AgJunction shareholders vote in favor of the
Transaction.
Ms. Lori Ell, Chair of the Board, commented,
"We are pleased to announce this Transaction, which offers our
shareholders a compelling opportunity to monetize their investment
at an attractive valuation and significant premium to the current
and historical trading price of the AgJunction shares. The
Transaction is also expected to accelerate the execution of
AgJunction's business plan, enhance access to additional customers
and markets, provide efficiencies from greater scale and allows the
opportunity for the retention of many AgJunction employees in the
go-forward entity."
Strategic Rationale
Agricultural machine automation is rapidly
advancing with increasing investment and consolidation. Adoption of
new automation demands tighter vehicle integration and large scale
distribution. Given the competitive landscape, delayed adoption
rates due to COVID-19, capital requirements and available sources
of capital, AgJunction’s Board initiated a confidential process,
supervised by the Special Committee in order to review strategic
alternatives available to AgJunction and, if they emerged, to
consider expressions of interest from third parties and any other
transactions that AgJunction may consider in connection with
strategic matters that are determined to be in the best interests
of AgJunction. With the assistance of AgJunction's financial
advisor, Piper Sandler & Co. ("PSC"),
potentially interested parties were contacted to determine their
interest level in pursuing a strategic transaction with
AgJunction.
Following a thorough review of available
alternatives, AgJunction’s Board has determined that the
Transaction with Kubota represents the best alternative available
for AgJunction to create substantial value for our respective
stakeholders including the shareholders given the current industry,
economic and capital markets conditions as well as existing
strategic relationship between AgJunction and Kubota. The Purchase
Price is all cash and the Transaction is not subject to any
financing conditions, which provides AgJunction shareholders with
an immediate opportunity to realize full liquidity and certainty of
value in cash for their investment in AgJunction.
AgJunction's directors, executive officers and a
significant shareholder of AgJunction holding a combined total of
approximately 20% of the issued and outstanding AgJunction common
shares, have entered into voting and support agreements, pursuant
to which they have agreed to vote in favor of the resolution
authorizing the Transaction at the Meeting (as defined below),
subject to the provisions of such voting and support
agreements.
The Arrangement Agreement and Requisite
Approvals
Under the Transaction, the Purchaser will
acquire all issued and outstanding AgJunction common shares in
exchange for the payment to shareholders of the Purchase Price for
each AgJunction common share held.
AgJunction will seek approval of the Transaction
by its shareholders at a special meeting expected to be held in
November 2021 (the "Meeting"). The Transaction is
subject to approval by shareholders at the Meeting, including the
approval of: (a) at least two-thirds of the votes cast by the
shareholders in person or represented by proxy at the Meeting; and
(b) a "majority of the minority", being a majority of the votes
cast by shareholders in person or represented by proxy at the
Meeting, after excluding the votes cast by those shareholders whose
votes are required to be excluded in accordance with Multilateral
Instrument 61-101 – Protection of Minority Security Holders in
Special Transactions.
Under the terms of the Arrangement Agreement,
the Transaction is also subject to the final approval of the Court
of Queen's Bench of Alberta following the Meeting, the completion
of applicable regulatory filings and the satisfaction of certain
closing conditions customary in transactions of this nature,
including the absence of material adverse changes in the business
and affairs of AgJunction. Upon closing of the Transaction, the
AgJunction common shares will be de-listed from the TSX. The
Arrangement Agreement contains customary representations and
warranties of each party and interim operational covenants by
AgJunction. The Arrangement Agreement also provides for, among
other things, customary board support and non-solicitation
covenants, a "fiduciary out" for unsolicited "superior proposals"
in favor of AgJunction and a provision for the right to match any
superior proposals in favor of Kubota.
The Arrangement Agreement provides for a
non-completion fee of approximately CAD $4.5 million. The
non-completion fee is payable in the event that the Transaction is
not completed or is terminated by AgJunction or the Purchaser in
certain circumstances, including if AgJunction enters into an
agreement with respect to a superior proposal or if the AgJunction
Board, in certain circumstances, withdraws or modifies its
recommendation with respect to the Transaction. The Arrangement
Agreement also provides a reverse termination fee of approximately
CAD $4.5 million.
Further details with respect to the Transaction
will be included in the management information circular to be
mailed to AgJunction shareholders in connection with the Meeting.
The Meeting is expected to be held in November 2021 with closing of
the Transaction to occur soon thereafter upon satisfaction or
waiver of all conditions precedent. A copy of the Arrangement
Agreement and the information circular will be filed on
AgJunction's SEDAR profile and will be available for viewing at
www.sedar.com.
Advisors
PSC acted as financial advisor to AgJunction in
connection with the Transaction. Research Capital Corporation
("Research Capital") acted as
advisor to the Special Committee and has provided its verbal
fairness opinion (the "Fairness
Opinion") to the Special Committee and the Board
that, as of the date of the Fairness Opinion, and subject to the
limitations, qualifications and assumptions disclosed to the
Special Committee and the Board in connection therewith, the
consideration to be received by AgJunction shareholders pursuant to
the Transaction is fair, from a financial point of view to
AgJunction shareholders. The full text of the written Fairness
Opinion, which describes the assumptions made, procedures followed,
matters considered and limitations and qualifications on the review
undertaken, will be included in AgJunction's management information
circular.
DLA Piper (Canada) LLP is acting as independent
legal counsel to the Special Committee.
Burnet, Duckworth & Palmer LLP is acting as
legal counsel to AgJunction.
Lazard Frères & Co. LLC is acting as
financial advisor to Kubota.
Mori Hamada & Matsumoto and Osler, Hoskin
& Harcourt LLP are acting as legal advisors to Kubota.
About
AgJunction AgJunction Inc. is a global leader
of advanced guidance and autosteering solutions for precision
agriculture applications. Its technologies are critical components
in over 30 of the world’s leading precision Ag manufacturers and
solution providers and it owns or licenses over 200 patents and
patents pending. AgJunction markets its solutions under leading
brand names including Novariant®, Wheelman®, Whirl™ and
Handsfreefarm® and is committed to advancing its vision by bringing
affordable hands-free farming to every farm, regardless of terrain
or size. AgJunction is headquartered in Scottsdale, Arizona, and is
listed on the TSX under the symbol "AJX." For more information,
please go to AgJunction.com.
About KubotaFounded in 1890,
Kubota Corporation is a global leading manufacturer of
agricultural, turf, construction equipment and industrial engine.
With its global headquarters in Japan, and footprint in more than
120 countries throughout North America, Europe and Asia, Kubota has
worked closely with farmers to develop agricultural machinery with
the aim to accelerate innovation to solve issues related to food,
water, and the environment. Although agricultural equipment is
Kubota’s primary line of products, Kubota also produces a diverse
portfolio of other products including pipe-related products,
environment-related products, and social infrastructure-related
products to contribute to improve human lives and society. Kubota
is listed on the Tokyo Stock Exchange under the symbol "6326". For
more information, please go to www.kubota.com.
Forward-Looking
Statements This press release contains
forward-looking information and forward-looking statements within
the meaning of applicable securities laws and is based on the
expectations, estimates and projections of management of AgJunction
as of the date of this press release, unless otherwise stated. The
use of any of the words "expect", "anticipate", "continue",
"estimate", "objective", "ongoing", "may", "will", "project",
"should", "believe", "plans", "intends" and similar expressions are
intended to identify forward-looking information. In
particular, this press release contains, without limitation,
forward-looking information and statements pertaining to: the
Transaction and the anticipated timing of required regulatory,
court and shareholder approvals; mailing of the information
circular related to the Meeting and the timing of the Meeting; the
anticipated benefits of the Transaction for AgJunction
shareholders; the ability of the parties to satisfy the other
conditions to, and to complete, the Transaction; and the
anticipated timing for the closing of the Transaction.
With respect to the forward-looking statements
contained in this press release, AgJunction has made assumptions
regarding, among other things, that the Transaction will be
completed on the terms contemplated by the Arrangement Agreement;
the ability of the parties to receive, in a timely manner and on
satisfactory terms, the necessary regulatory, court, shareholder,
stock exchange and other third party approvals; the ability of the
parties to satisfy, in a timely manner, the other conditions to the
closing of the Transaction; and other expectations and assumptions
concerning the Transaction. Although AgJunction believes that the
expectations reflected in the forward-looking statements contained
in this press release, and the assumptions on which such
forward-looking statements are made, are reasonable, there can be
no assurance that such expectations will prove to be correct.
Readers are cautioned not to place undue reliance on
forward-looking statements included in this press release, as there
can be no assurance that the plans, intentions or expectations upon
which the forward-looking statements are based will occur.
By their nature, forward-looking statements
involve numerous assumptions, known and unknown risks and
uncertainties that contribute to the possibility that predictions,
forecasts, projections and other forward-looking statements will
not occur, which may cause AgJunction's actual performance and
financial results in future periods to differ materially from any
estimates or projections of future performance or results expressed
or implied by such forward-looking statements. These risks and
uncertainties include, without limitation, completion of the
Transaction is subject to a number of conditions which are typical
for transactions of this nature, certain of which are outside the
control of AgJunction, failure to satisfy any of these conditions,
the emergence of a superior proposal or the failure to obtain
approval of AgJunction's shareholders may result in the termination
of the Arrangement Agreement. As a consequence, actual results may
differ materially from those anticipated in the forward-looking
statements.
Readers are cautioned that the forgoing lists of
factors are not exhaustive. Additional information on these and
other factors that could affect AgJunction's operations and
financial results are included in reports on file with Canadian
securities regulatory authorities and may be accessed through the
SEDAR website (www.sedar.com) and at AgJunction's website
(AgJunction.com). Furthermore, the forward-looking statements
contained in this press release are made as at the date of this
press release and AgJunction does not undertake any obligation to
update publicly or to revise any of the forward-looking statements,
whether as a result of new information, future events or otherwise,
except as may be required by applicable securities laws.
This release does not constitute an offer to
purchase or a solicitation of an offer to sell securities.
Shareholders are advised to review any documents that may be filed
with securities regulatory authorities and any subsequent
announcements because they will contain important information
regarding the Transaction and the terms and conditions thereof.
Contact:
Media AgJunction
Inc.press@agjunction.com Investor
Relations Gateway Investor
Relations Cody Slach or Cody
Cree 1-949-574-3860 AJX@gatewayir.com