TOROMONT + ENERFLEX = GLOBAL FORCE
Successful Bid for Enerflex Instantaneously Boosts Toromont
to the Forefront of International Compression Industry
By Phil Burnside
No one should have been surprised when Toromont
Systems, a part of Toromont Industries Ltd. (Toromont) made
an aggressive public bid for Enerflex Systems Income Fund
(Enerflex). A good deal of whatever growth has taken place
in the compression packaging industry over the past 18
months or so has tended to originate outside North America.
Packagers such as Exterran and Valerus have enjoyed significant success in South America. Canada’s Propack has done a
good job of penetrating the Asian market.
Enerflex has worked hard to establish itself in Europe
and in Australia. The company’s emphasis on the Australian
market, especially, is bound to pay dividends in light of the
offshore and coalbed methane natural gas development
burgeoning there today.
Toromont Systems, on the other hand, has focused primarily on the North American market. It has grown and
strengthened its position in Canada. The company also began to establish what has become a strong presence in the
Rocky Mountain and coalbed methane-producing regions
of the Western United States when it established a shop in
Casper, Wyoming, U.S.A. Since then, the company has established seven sites in the area and was recently named
Toromont management realized, however, that the company needed to expand beyond the North American continent. As a result, Toromont offered Enerflex unit holders up
to Ca$13.50 per unit in cash on Oct. 16, 2009. Toromont
raised its offer to up to Ca$14.25 in cash or 0.5382 of a
Toromont common share plus $0.05 in cash per unit in
mid-December.
On Jan. 21, 2010, Toromont announced that 39,583,074
trust units of Enerflex and 2,640,692 exchangeable limited
partnership units of Enerflex Holdings Ltd. Partnership had
been tendered to Toromont’s offer, and that it owned approximately 96% of the outstanding Enerflex trust units on
a fully diluted basis. The number of units owned by
Toromont is sufficient to cause the redemption and acquisition of all of the remaining units.
“We now have the opportunity to move forward with the
integration of Enerflex and our Toromont Energy Systems
business,” said Robert M. Ogilvie, chairman and chief exec-
utive officer of Toromont. “The combination will be a win
for customers as well as Toromont shareholders, including
those Enerflex unit holders who are choosing to take
Toromont shares. It will also provide employees of both
companies with a challenging and exciting opportunity to
help build a Canadian-based global leader.”
According to Enerflex President and CEO Blaire Goertzen
(COMPRESSORTechTwo, January/February 2006), the combination
of the two companies always made sense. He said, “the
two organizations together are much stronger than either
standing independently. [The combined companies] will
have a broader product offering. Each has products and
services at which they excel, and as one company they will
be able to offer the best of the best.”
He pointed out that Enerflex’s major investments in the
Australian and Asian Pacific region are certain to pay big div-
idends for Toromont.
Ogilvie said that the successful conclusion of the acquisition goes a long way toward creating a globalized compressor packaging and service operation. “By itself, the combination of Enerflex and Toromont creates a global footprint
that will leave a deep impression,” he said.
The aggregate cash consideration to be paid by Toromont
for the units tendered to the offer and those units yet to be
acquired will be valued at approximately $315.6 million.
About 11. 9 million Toromont common shares will be issued
in completing the acquisition.
Toromont plans to acquire all of the remaining outstanding trust units of Enerflex on the same terms as the units
acquired under the offer, with the acquisition expected to
be completed in late February. ;
C
