AGT expands logistics chain
Mobil Capital acquisition provides shortlines and loading facilities
Saskatchewan pulse processor AGT Food and Ingredients Inc. is expanding its grain origination and shipping capabilities in Western Canada.
AGT and its subsidiary, Alliance Pulse Processors Inc., are buying Mobil Capital Holdings and its subsidiary companies for $57.5 million.
Mobil’s subsidiaries include Mobil Grain, a grain processing and loading operation based in central Saskatchewan; Last Mountain Railway, a short-line railway company that owns 136 kilometres of track between Regina and Davidson, Sask.; and Big Sky Railway, a short line with 400 km of track in west-central Saskatchewan.
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The $57.5 million purchase price will include $19 million in common AGT shares, a $19.5 million promissory note repayable in installments over five years and the remaining $19 million in cash.
The sale is subject to conditions but is expected to be completed before the end of the year.
The deal was announced just a few months after AGT bought West Central Road and Rail, a Saskatchewan grain handling company that includes grain collection and rail car loading facilities in Eston, Beechy, Lucky Lake, Dinsmore and Laporte, all served by Big Sky Railway.
“(The Mobil deal) is an exciting follow-on acquisition to our previously completed investment in bulk loading and handling assets of West Central Road and Rail,” said AGT president Murad Al-Katib.
Acquiring rail and loading infrastructure will allow AGT to compete more effectively in global grain and pulse markets, he added.
“The ability to control our logistics chain with ownership of rail logistics assets and short-line rail infrastructure and equipment servicing our handling assets … allows AGT to create a competitive advantage over time,” Al Katib said.
In addition to its shortlines and grain handling assets, Mobil also buys and sells pulse crops and cereal grains, primarily in Saskatchewan and Ontario, and owns a direct ship loading operation at the Port of Thunder Bay.
That operation includes a 170-car loop track used to load vessels and ship pulse crops and durum to European and Mediterranean markets.
When it was established in 2004, Mobil used a patented modular transportable grain processing facility to process and load grain onto rail cars.
Within a few years, the company’s owners, Sheldon and Lavern Affleck, acquired 136 km of track from Canadian National Railway and established Last Mountain Railway, which runs from Regina to Davidson.
In 2011, Mobil acquired another 400 km of track southwest of Saskatoon and formed Big Sky Rail Corp.
The company then secured running rights on other parts of CN’s Saskatchewan rail network, which allowed Mobil to transfer its equipment between the two short lines.
With this deal, AGT and Alliance will have rail assets that cover most of west-central Saskatchewan as well as direct rail access to Saskatoon and Regina.
Al-Katib said anticipated growth in AGT’s global pulse and durum business warranted continued investments in Western Canada.
He said the Prairies continue to be a primary source of durum for growing demand in North Africa and the Middle East, particularly in Algeria, Tunisia, Morocco and Turkey.
Turkey is already the world’s second largest pasta exporter.
AGT’s subsidiary in Turkey, the Arbel Group, produces staple food such as Arbella Pasta, rice, and milled wheat products, including bulgur and semolina.
“When I look at lentils, peas and durum, those are three crops that we’ve invested in heavily in terms of our asset base around the world,” Al Katib said.
“One of the motivations for taking this acquisition is that we need to solidify our supply chain in durum … and add some capacity for lentils and peas.”
Sheldon Affleck said the sale to AGT will result in a stronger company with enhanced reach and capabilities.
“We’ve worked with AGT over the past couple of years or so, and during the time it became more and more apparent that we had very good synergies,” Affleck said.
“Our strengths matched their weaknesses, you might say, and vice versa, so … together we’ll be much stronger than we were separately.”
AGT processes pulses, staple foods and ingredients for export and domestic markets. It also supplies retail packaged and canned food to retail and food service sectors.
The company has offices and processing facilities in Canada, the United States, Turkey, China, Australia and South Africa, as well as merchandizing, sales and origination operations in the United Kingdom, the Netherlands, Spain, Switzerland, India and Russia.
