Vancouver's CanWel Building Materials Income Fund (TSX:CWX.UN) plans to acquire Vancouver-headquartered Broadleaf Logistics Company in a cash and share deal following its conversion back into a dividend-paying corporation.
CanWel is offering $20 million in cash, 10.25 million CanWel shares and a US$18.5 million secured subordinated promissory note to acquire Broadleaf from Rudy Holding II SARL. The total purchase price is subject to a number of post-closing adjustments based on the relative amounts of net working capital of CanWel and Broadleaf.
The deal is expected to increase the company's sales by more than 80%. In 2008, CanWel reported sales of $803.9 million. On a pro forma basis, the combined business would have generated approximately $1.5 billion in 2008.
Broadleaf currently employs approximately 270 employees at 14 distribution centres across the country.
CanWel said the combined business will result in significant synergies with the rationalizing of the two companies existing distribution networks.
The deal will follow CanWel's raising of $50 million in a private placement, which will be used to pay the cash portion of the deal, expenses associated with the acquisition, repay debt and for general corporate purposes.
The deal will also come after CanWel's conversion from an income trust to a corporation in early 2010. The fund plans to hold a special unitholder meeting in January 2010.
CanWel's unit price range during the past week: between $3.89 and $4.06; 52-week high: $4.25; 52-week low: $1.08.