HIAWATHA, Kan., and FREMONT, Calif. — AgJunction Inc. (“AgJunction”) (TSX:AJX) and Novariant Inc. (“Novariant”) have entered into an agreement (the “Agreement”) under which AgJunction has agreed to acquire Novariant through a merger transaction pursuant to which AgJunction will issue common shares to Novariant shareholders.
Combined, the two companies establish a preeminent position in automated steering and machine control technologies worldwide, combining product portfolios and leveraging industry-leading intellectual property.
Specifically, Novariant and AgJunction will be better positioned to achieve market objectives through leveraging:
A larger presence with more resources
A broader OEM partner list
One of the precision agriculture industry’s most comprehensive intellectual property
portfolios, providing increased IP protection for OEM partners
Increased R&D capability and efficiency
Complementary customers, market geographies and distribution channels
Reductions in operating redundancy to further improve profitability
Novariant is a premier provider of advanced steering solutions for precision agriculture. Based in Silicon Valley, Novariant’s steering solutions are used today in over 60 countries. With approximately 55 employees worldwide, Novariant generated revenues of approximately $30 million in 2014.
Completion of the transaction is expected during the summer of 2015 and is subject to a number of conditions, including receipt of a permit from the California Commissioner of Corporations following a hearing held to consider the terms of the transaction, approval of the shareholders of Novariant, approval of the shareholders of AgJunction at a Special Shareholders Meeting to be held in the summer of 2015 (the “Meeting”) and receipt of customary regulatory approvals, including the approval of the Toronto Stock Exchange.
Under the terms of the Agreement, which has been unanimously approved by the boards of directors of both companies, AgJunction shares will be issued to shareholders of Novariant in exchange for all of the shares of Novariant. After giving effect to the issuance of such AgJunction shares, AgJunction will have approximately 123.7 million fully diluted shares outstanding, of which approximately 49.5 million shares will be held by the former shareholders of Novariant, representing approximately 40% of the combined company.
Upon conclusion of the transaction, it is anticipated that directors, officers, and other insiders will hold approximately 30.6% of the combined company. This includes Novariant’s largest shareholder, Investor Growth Capital (“IGC”), an independent venture capital firm specializing in expansion-stage investments. IGC will become the largest shareholder of the combined company at approximately 15% ownership.
This transaction will create a leading technology and innovation company, differentiated by its broad intellectual property portfolio and its ability to deliver application-specific solutions to precision agriculture customers globally.
“Novariant established itself as a pioneer in guidance and auto-steer technologies over 20 years ago”’ said Dave Vaughn, CEO of Novariant. “Most recently, Novariant has sharpened its focus on precision agriculture and has positioned its offerings to address a major shift in our industry from after-market channels to factory-installed solutions.
“A shift like this occurs only once during the life cycle of a technology, and great companies can be created by accelerating and innovating at the right time,” added Vaughn. “At Novariant we believe this is a transformational opportunity, and AgJunction is the right partner.”
As global machine manufacturers increasingly target the integration of auto steer technologies at the factory level, the combined companies can bring advanced levels of machine automation to both current and future OEM clients faster and at lower cost.
"The combination of Novariant and AgJunction creates an exciting opportunity for our company, for our customers and for our shareholders,” stated Rick Heiniger, president and CEO of AgJunction. “This merger extends the reach and influence with which we pursue a common passion — delivering the most accurate, innovative and reliable steering solutions in the world.”
Additional information in respect of the transaction will be forthcoming in the information circular that will be provided to AgJunction shareholders in connection with the Meeting to approve the transaction.
Headquarters and Management
Upon closing of the transaction, the combined company will have approximately 200 employees worldwide and will be headquartered at Novariant’s corporate headquarters in Silicon Valley. The combined company plans to maintain additional offices in Kansas, Arizona, Pennsylvania, Canada and Australia.
Dave Vaughn, CEO of Novariant, will be appointed CEO of the combined company, with current AgJunction CEO Rick Heiniger serving as Senior Advisor to the CEO. In addition, Wes Dittmer will continue to serve as the combined company's CFO.
Dave Vaughn brings over 20 years of senior executive experience in precision guidance and agri-business to AgJunction. His roles include executive-level positions with Topcon Positioning Systems Inc., NovAtel Inc., Magellan and Trimble Navigation Limited. He has served on the board of directors for a number of technology corporations and has extensive professional experience in the high tech sector, including serving in an executive capacity with Apple Inc. and Hewlett- Packard.
Upon closing of the transaction, three Novariant directors will be appointed to the AgJunction board of directors. Current AgJunction directors Rick Heiniger and Barry Batcheller will not stand for reelection to their board positions to accommodate the incoming board appointments. Current AgJunction Chairman Michael Lang will be appointed vice chairman and the resulting AgJunction board will consist of the following:
Jon Ladd Chairman of the Board
Michael Lang Vice Chairman
Mark Anderson Director
Paul Cataford Director
Jose Suarez Director
John Tye Director
Dave Vaughn Director
AgJunction’s new Chairman, Jon Ladd, has been a member of the Novariant board of directors and Senior Advisor to the CEO since 2012. Ladd is also currently Chairman of Hemisphere GNSS Inc. He has over 30 years of development and management experience in the global GNSS and wireless sectors. Previously, Ladd was CEO and Chairman of Brilliant Telecommunications prior to its acquisition by Juniper Networks and was the president and CEO of NovAtel Inc. (NASDAQ: NGPS) prior to its acquisition by Hexagon AB.
Jose Suarez serves as Managing Director for IGC. Established in 1995, IGC has invested more than $3.0 billion in over 250 companies around the world. Suarez is a member of the Novariant board of directors and represents one of the largest shareholders of Novariant. Upon the completion of the merger, IGC will become the largest shareholder in AgJunction, holding approximately 15% of the issued and outstanding AgJunction shares.
Structure of the Transaction and Required Approvals
The transaction will be effected by way of a plan of merger under the laws of the State of California and is anticipated to close during the summer of 2015. Closing of the transaction is subject to, among other conditions, receipt of a permit from the California Commission of Corporations following a hearing held to consider the terms of the transaction, approval of the transaction by Novariant shareholders, approval of AgJunction shareholders to the issuance of AgJunction shares pursuant to the transaction and certain other matters related to the transaction, the receipt of all necessary regulatory and stock exchange approvals, and satisfaction of certain other closing conditions that are customary for a transaction of this nature.
Approval of the Novariant shareholders will be sought through written consent. The transaction will require the approval of Novariant’s common and preferred shareholders.
The issuance of the AgJunction shares to Novariant shareholders pursuant to the transaction will require the approval of a majority of the AgJunction shares voted in person or by proxy at the Meeting of AgJunction shareholders. It is anticipated that the AgJunction shareholder meeting will be held in the summer of 2015 following the anticipated mailing of an information circular regarding the transaction to shareholders.
The directors of both AgJunction and Novariant have unanimously approved the transaction and resolved to recommend that their respective shareholders vote in favour of the transaction. Each of the directors and officers of AgJunction and Novariant have entered into support agreements pursuant to which each has agreed to vote their shares in favour of the transaction. Each party has agreed to pay a non-completion fee of U.S. $2 million to the other party in certain circumstances as set forth in the Agreement.
Complete details of the terms of the transaction are set out in the Agreement, which will be filed by AgJunction and be available for viewing under its profile at www.sedar.com on or before March 26, 2015.
For more than two decades, Novariant has focused on the development and application of advanced precision steering solutions for agriculture that provide differentiated steering performance across multiple platforms. Novariant offers interoperable auto steer capabilities to OEMs and VARs worldwide with over 750 unique platform-install kits and more than 30,000 systems in the field. For more information please go to www.novariant.com.
AgJunction provides innovative hardware and software applications for precision agriculture worldwide. AgJunction holds numerous patents and markets its products and services under leading brand names including Outback Guidance, Satloc, and AgJunction Cloud Services. AgJunction supports advanced farming practices and enables seamless data connectivity among growers and their agricultural service providers. Headquartered in Hiawatha, Kan., AgJunction has facilities in Arizona, Pennsylvania, Winnipeg and Queensland, Australia. AgJunction is listed on the Toronto Stock Exchange (TSX) under the symbol “AJX.” For more information, please go to www.agjunction.com.