The world’s biggest privately-owned chain of Deere construction and forestry equipment dealerships is set to expand its reach into Deere farm equipment in a major way.
Brandt Tractor, the equipment sales arm of the Regina-based Brandt Group, on Monday announced an agreement to buy all of publicly-traded Cervus Equipment Corp. for $19.50 a share, valuing the Calgary-based chain at about $302 million.
Cervus’ holdings today include 22 Deere dealerships in Alberta, Saskatchewan and B.C., 17 Peterbilt dealerships in Ontario and Saskatchewan, eight forklift dealerships in Alberta, Saskatchewan and Manitoba, seven Deere dealerships in Australia and nine in New Zealand. Another Deere dealership is due to open at Penhold, Alta., near Red Deer, next year.
Cervus dates back to 1982, when the company’s current chairman Peter Lacey bought five Deere dealerships in Alberta. It listed on the TSX in 2000 and went on to buy further outlets across Canada, expanding also into New Zealand and Australia in 2010 and 2012 respectively.
Brandt Tractor, meanwhile, operates 56 dealerships across Canada, selling Deere equipment such as skid steers, dozers, excavators and feller bunchers and also handling sales and service for brands such as Ditch Witch, NPK, Hammerhead and Topcon.
Brandt CEO Shaun Semple said Monday the addition of Cervus would see Brandt Tractor shift its dealership chains into three new segments “dedicated to serving the agriculture, transportation and material handling industries.”
Those segments, he said, “will further establish Brandt as a total solutions provider across our diverse customer groups.”
“As a private company with a committed, well-capitalized and long-term owner, Cervus will be better positioned for the next stage of evolutionary growth for our dealerships,” Cervus CEO Angela Lekatsas said in the same release.
“The size and scale of the entity created by the combination of our two companies will allow for increased investment into Cervus for the benefit of our employees and customers.”
John Deere Canada and Peterbilt Motors have already consented to the change of control, Brandt and Cervus said in their release.
Brandt and Cervus said they expect to close the deal sometime in the fourth quarter of this year, pending the outcome of a special meeting of Cervus shareholders to be held sometime in October.
Among Cervus shareholders, Lacey, who holds about 18 per cent, has already locked into an “irrevocable” agreement to vote his shares in favour of the Brandt deal.
Other Cervus directors and officers, who in all hold about one per cent, have “revocable” agreements in place to vote in favour. Also, as of Monday, Brandt and affiliates together hold about nine per cent of outstanding Cervus shares.
Brandt said its proposed deal represents a 37 per cent premium to the 20-day volume-weighted average price per Cervus share for the period ending Aug. 13.
Cervus on Monday also announced its best-ever second quarter, booking $14.88 million in adjusted before-tax income for the period ending June 30, up from $8.08 million in the year-earlier period. Gross revenue from sales and service for the period came in at $402.3 million, up from $340.97 million in Cervus’ 2020 Q2.
Ag equipment revenue specifically was up 10 per cent in the quarter, “primarily driven by increased customer demand for new equipment, supported by strong market fundamentals in all our geographies.” — Glacier FarmMedia Network