North America’s top peat producer for the horticulture market will go private as one of its shareholders moves to take up the stake it didn’t already own.
Calgary roofing shingle maker IKO on Sunday announced it will buy Vancouver-based Sun Gro Horticulture in a $6.60-per-share friendly cash takeover.
The deal, pending tenders of at least two-thirds of publicly-traded Sun Gro’s shares (TSX:GRO) and other “customary conditions,” is expected to close in March.
The sale follows Sun Gro’s formal review in September of alternatives to “enhance shareholder value” and “we are satisfied that the transaction with IKO results in the best value available,” Sun Gro CEO Mitch Weaver said Sunday.
IKO’s bid on the 81 per cent of Sun Gro it doesn’t yet own is about 28 per cent over Sun Gro’s 20-day volume-weighted average trading price. A formal offer, with a deadline of March 7, is expected to be mailed by the end of this month.
“We are very pleased to be increasing our ownership interest in Sun Gro and look forward to building on this outstanding company’s more than 80 years of leadership and innovation in the growing media industry,” Derek Fee, IKO’s manager of corporate communications, said in the same release.
Sun Gro, founded as Western Peat Co. in Vancouver in 1929, has evolved into North America’s largest manufacturer of horticultural-grade peat and biggest distributor of peat moss and peat and bark-based growing mixes.
Under Weaver’s management, the company shifted its focus in the late 1990s away from building retail market share toward a higher-margin and “more stable” market of professional greenhouse, nursery and specialty crop growers, golf course developers and landscapers.
The company has since expanded its way eastward and southward by buying up other peat and growing mix businesses in several provinces and states. It became an income trust in 2002 and reorganized as a publicly-traded corporation in 2010, ahead of a new tax structure on income trusts taking effect this year.
IKO, a private family-owned firm, set up shop 60 years ago in Calgary and has since built or bought capacity in Ontario, B.C., Alberta, the U.S. and Europe.
Apart from asphalt roofing products the company makes organic and fiberglass-based shingles, roofing felts, modified bitumen roofing systems, polyisocyanurate insulation board and other waterproofing materials.