Barloworld says its Mongolia subsidiary has entered into an agreement to acquire 100% of Wagner Asia Equipment and 49% of SGMS LLC to help establish a new Eurasia-focused equipment unit.
The Caterpillar dealer has agreed to pay $216.8 million as part of the transaction, which will see the remainder of SGMS continue to be held by Battur Battulga, a Mongolian citizen actively involved in managing SGMS, which, Barloworld says, supplies equipment, parts and services to a key customer.
Through Wagner International LLC and its subsidiaries, the Wagner family have been doing business in Mongolia for over 22 years and are a long-standing Caterpillar dealer in selected states in the US.
Wagner Asia Equipment is engaged in the business of selling and distributing construction equipment, mining equipment, power systems, and related goods and services in Mongolia, primarily under the Caterpillar brand, according to Barloworld. It recently presented four 55 t CAT773 E dump trucks to Ulz Group, a Mongolia-based company focused on mining, exploration and construction (ceremony pictured).
Barloworld, in a SENS release, said it had consistently stated its desire to allocate capital to opportunities that complement its competencies as part of its medium-term strategy.
“The group balance sheet is strong and this opportunity, adjacent to the current Russian operation, presents an attractive growth prospect within the Equipment division,” it said. “The Wagner Asia Equipment business will be combined with the current Barloworld Russian business unit into a newly formed Equipment Eurasia unit.”
The proposed transaction is subject to the following outstanding conditions:
- The conclusion of various agreements with Caterpillar Inc (or an associated entity) in respect of the Caterpillar dealership in Mongolia;
- The carve-out, exclusion or transfer of non-core assets, liabilities, agreements, customers and debtors held by Wagner Asia Equipment prior to completion of the proposed transaction;
- Obtaining the consent and associated waiver of Battur Battulga to the proposed transaction and the entry into of a new shareholders’ agreement;
- Obtaining the consent(s) and/or waiver(s) from certain third parties in respect of certain rights arising from the change of control contemplated by the proposed transaction; and
- Gaining the necessary board approvals of the seller, the purchaser and Barloworld.
The proposed transaction is expected to complete on or about April 1, 2020, with a long stop date of October 1, 2020, Barloworld says.