The transaction is expected to close before the end of the first quarter of 2010 and is subject to antitrust clearance in the United States, as well as customary closing conditions, including entry into a definitive purchase agreement, regulatory approvals and satisfactory due diligence. Further details on the transaction will be provided once preliminary closing conditions have been satisfied. The letter of intent provides Stella-Jones with the exclusive right to negotiate and execute a definitive purchase agreement during the period leading up to the Termination Date.
Tangent serves the railroad industry with treated wood products, mainly railway ties, through facilities located in Warrior, Ala.; Terre Haute and Winslow, Ind.; Alexandria, Louisiana and McAlisterville, Pa. The wood preservative, creosote, is produced at its distilleries in Terre Haute and Memphis, Tenn. Life-cycle solutions, consisting of tie pickup and tie disposal, are carried out at three facilities in Alabama, Minnesota and North Carolina.
"The acquisition of Tangent Rail Corporation would considerably enhance our offerings to the U.S. railroad industry, while also extending our geographical reach," said Brian McManus, President and CEO of Stella-Jones. "Tangent enjoys a solid market reputation and possesses high-quality assets, which should facilitate its integration into our network if the transaction is completed."
The company plans to finance the acquisition through a combination of equity and debt, subject to prevailing market conditions.