Commercial Solutions, Inc., a leading Canadian distributor of bearings, power transmission equipment, oilfield, industrial, and safety products, announces it has entered into a letter of intent with Industrial Distribution Group, Inc., pursuant to which IDG or its affiliate, subject to certain conditions, would acquire all of the issued and outstanding common shares of the company for a cash purchase price based on an enterprise value of CAD$51.38 million, which represents, after deducting the Company's indebtedness and subject to transaction expenses, approximately CAD$1.50 in cash per Common Share representing approximately an 87% premium over the closing price of the Common Shares on the TSX on December 4, 2012. The transaction would be implemented by way of a statutory plan of arrangement.
Completion of the proposed transaction is subject to certain conditions including, but not limited to, the execution of a definitive binding arrangement agreement, approval of the Board of Directors of IDG, the approval of at least 66 and 2/3% of the votes cast in person or by proxy at a special meeting of the Company's shareholders, and regulatory and court approval.
The Board of Directors of the company unanimously approved the letter of intent. Mr. Jim Barker, President and Chief Executive Officer of the Company, commented, "This transaction brings our shareholders significant value and opportunity for our organization to integrate with a North American leader to provide a strong platform for enhanced client service and expanded opportunities for our employees."
Mr. Scott F. Prince, the lead director of IDG's Board of Directors, added, "The combination of Commercial's leading position in Western Canada and IDG's strong management team, deep products expertise, and world-class Integrated Supply Chain solutions will create value for customers throughout the Canadian and North American markets."
A special meeting of the company's shareholders is expected to be scheduled to approve the proposed transaction. An information circular in connection with the statutory plan of arrangement will be mailed to the Company's shareholders in due course.
Under the letter of intent, the company has agreed that it will not solicit, initiate or participate in any discussions concerning any other acquisition proposals. The company has also agreed to pay a termination fee in certain circumstances, including if the company does not receive the requisite approval of its shareholders as required by the interim order issued as part of the arrangement or the company accepts an alternative acquisition proposal.
There can be no assurance that these conditions precedent, or any other conditions precedent, will be satisfied. Further, there can be no assurance that the proposed transaction will be completed as proposed at all.
Headquartered in Edmonton, Alberta, Commercial is one of Canada's leading independent industrial distributors with 23 Services Centres and approximately 275 employees located primarily in Western Canada. Commercial offers more than 160,000 items critical to maintenance repair and operations (MRO) and original equipment manufacturer (OEM) customers. The Company represents 450 leading manufacturers and serves over 11,000 customer accounts within a broad cross-section of industries, including oil and gas, forestry, agriculture, firefighting, food processing, chemical processing, mining, utilities, manufacturing, and construction. Commercial trades under the symbol "CSA" on the Toronto Stock Exchange. For further information on the Company, please visit www.commercialsolutions.ca and for detailed financial information visit www.sedar.com.
IDG is a leading global supplier of maintenance, repair, operating and production ("MROP") products and Supply Chain Solutions. IDG delivers strong technical expertise in products such as cutting tools, hand and power tools, abrasives, material handling equipment, lubricants, safety products, fluid power, and compression, as well as solutions from vending and automation solutions to full storeroom management. IDG serves approximately 12,000 active customers throughout North America and China, representing a diverse group of local, national, and international businesses.