Great Sandhills Terminal purchase | Shareholders supported the sale for $17.5 million
Canadian grain company CWB has added another high-throughput terminal to its growing network of prairie grain handling facilities.
CWB officials confirmed that the company has completed a deal to acquire all shares of Great Sandhills Terminal Ltd. for about $17.5 million or $582 per share.
The deal was completed in late August following a shareholder’s vote in which 100 percent of the ballots cast by shareholders supported the sale.
“The result of the Great Sandhills Terminal shareholder vote is a resounding affirmation of farmers’ level of confidence in CWB’s strategic direction, and in our ability to be a strong and viable competitor in the Western Canadian marketplace,” said CWB president and chief executive officer Ian White.
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“This deal strengthens our presence in western Saskatchewan with the addition of another large-capacity grain terminal and officially puts us in the short-line railway business.”
GST is the latest in a string of acquisitions that began in 2013.
GST assets include a 23,400 tonne capacity high-throughput grain handling facility near Leader, Sask., and a majority stake in Great Sandhills Railway, a short-line railway that operates 197 kilometres of track between Swift Current and Burstall, Sask.
“CWB continues to build a strong network throughout the grain marketing supply chain through the purchase and construction of assets in the country and at port,” said White.
“As CWB continues to grow, we become more attractive to farmers looking at the potential long-term benefits of choosing to deliver to CWB.”
In an interview with The Western Producer last week, CWB’s chief strategy officer Dayna Spiring said Great Sandhills is an important piece in CWB’s growing network of elevators.
The facility will enhance the company’s competitive position as it moves toward privatization, she said.
CWB is required to submit a formal privatization plan to the federal government in less than two years.
On an operational level, CWB does not expect to make any immediate changes at either operation.
Instead, the company will evaluate GST’s operations and learn from existing staff, said Spiring.
The newly acquired stake in Great Sandhills Railway could lead to new opportunities in grain collection, she added.
“In terms of the railway, while we haven’t been involved in running a railway (in the past) … we do have a great deal of logistics expertise and we have a team of people here that understand that business very well,” she said.
“We see great opportunities on that rail line … There may be opportunities to compile grain at other locations on that railway and either ship it through GST or ship it to another facility, so we’re looking at a whole bunch of options and we’re excited about the possibilities.”
The acquisition of Great Sandhills Terminal will reduce CWB’s dependence on competing grain companies that are currently under contract to handle CWB grain and provide port access.
Spiring said some of CWB’s commercial grain handling agreements with competing elevator companies have worked out well, while other haven’t.
“We have relationships with all of the companies in Western Canada and some of those relationships have worked out better than others, there’s no question about that,” she said.
“But we do have some really fantastic partners and we intend that the vast majority of those agreements are going to be continued …. There are others that may not be as useful from our perspective or from the other company’s perspective.”
Spiring said some of CWB’s grain handling agreements are due to expire and likely won’t be renegotiated.
