Clean Seed enters planter business with acquisition of Harvest International
By: Realag Machinery Insider
July 17, 2018
Clean Seed Capital Group — the Canadian company behind the CX-6 Smart Seeder — has announced a deal to acquire U.S. planter equipment manufacturer Harvest International.
The company also debuted the first Clean Seed Smart Planter at Ag in Motion on Tuesday, built with Harvest International technology.
“Following the granting of Clean Seed patents in the United States, we sought to find a synergistic industry partner with respected roots in the U.S. who would position us for accelerated growth and innovation,” says Graeme Lempriere, president and CEO of Clean Seed, announcing the agreement on Tuesday morning. “Their industry experience, proven technology and aligned core values made Harvest International the perfect fit. We collectively recognize the significance of the opportunity to cross-pollinate our robust and industry leading intellectual property portfolios in the North American seeder and planter markets.”
Colin Rush, chief operating officer for Clean Seed, explains how the deal with Harvest International came together, and plans for combining the two companies with RealAg’s Kelvin Heppner at Ag in Motion:
Based in Storm Lake, Iowa, Harvest International was founded in 2007 by the same Friesen family that started Meridian Industries in 1963, and later, Friesen of Iowa. (continues below.)
Harvest International originally manufactured augers and conveyor systems, but switched its business in 2014 to focus on planter technology, securing patents for planter row unit components. The auger and conveyor business was sold in 2017.
“Harvest International has a proud history of farmer-focused innovations in agricultural manufacturing and intellectual property development,” says Byron Friesen, president of Harvest International, who will remain in a senior management role and join the Clean Seed board of directors. “This acquisition allows us to grow and join forces with a like-minded tech forward company to deliver innovations not yet seen by North American farmers.”
Harvest International has a 75,000 square foot manufacturing facility and office in Storm Lake.
Lempriere says the acquisition is “best described as a merger of two cutting-edge technology pioneers of the agricultural industry… We look forward to accessing an extensive U.S. market and community as well as executing on future plans to bring proven planter technology north into Canada. The combination our of strong intellectual properties and innovative technologies opens the door to provide significant marketplace advantage for Clean Seed.”
Byron Friesen, president and CEO of Harvest International, discusses the deal with Clean Seed:
Clean Seed says the purchase price for Harvest International includes the following:
- the issuance of 8,000,000 Clean Seed common shares at closing, which will be subject to the standard four month hold period under applicable securities laws and TSX Venture Exchange (TSX-V) rules;
- a cash payment at closing of US$2,580,718, subject to customary closing adjustments;
- the assumption or restructuring at closing of notes payable of Harvest International and an affiliate aggregating approximately US$7,519,282;
- future additional cash payments of up to US$6,000,000, based on Harvest International’s achievement of certain earn-out performance milestones, which will be paid out at the earliest in US$2,000,000 annual installments over a three year period from December 31, 2019.
The acquisition is still subject to regulatory and financing approvals. Clean Seed says it expects to close the deal in late 2018.
Trading of Clean Seed shares on the TSX-V was halted last week to mitigate any potential trading issues in the case the first Clean Seed planter unit was spotted crossing the border into Canada for Ag in Motion, according to the company. Trading will resume after the exchange has the required documentation regarding the acquisition.