GUELPH, Ont.—Linamar Corp. is jumping into the agricultural equipment market with a $1.2 billion acquisition.
The Ontario-based manufacturer, which makes automotive drivetrains and industrial parts, said Dec. 14 it has agreed to buy MacDon Industries Ltd. in an all-cash deal. The move is a significant pivot for Linamar, which earns most of its revenue as part of the global automotive supply chain.
“The acquisition of MacDon provides a truly once-in-a-lifetime opportunity to move our agriculture business into a market leading position while providing meaningful diversification to the end markets we serve,” Linda Hasenfratz, the company’s CEO, said in a statement.
Hasenfratz pointed to long-term growth fundamentals in the agricultural industry and the need for diversification as two key reasons for the acquisition.
“MacDon is a strong, well-managed company and an innovative market leader in both customer penetration and technology evolution; it will be the centerpiece of our agriculture business,” she added.
Originally founded as Killbery Industries in 1949, MacDon now operates an approximately 900,000 sq. ft. manufacturing facility in Winnipeg. It has on-site research and development, a workforce of about 1,400 and exports to more than 40 countries.
The company is best known for its agriculture harvesting equipment such as drapers and self-propelled windrowers.
Linamar intends to combine MacDon with its existing agricultural unit in Hungary and said the deal will generate “modest synergies.”
Investors responded positively to the deal, sending the company’s shares up more than eight per cent in early trading Dec. 15.
The purchase needs to clear the customary regulatory barriers, but is expected to close early next year.