RotoGro to Acquire Hanson Fertigation
• RotoGro has agreed to acquire one hundred percent (100%) of the
Fertigation assets, intellectual property, ongoing contacts, key
personnel, industry know-how and business goodwill
• The acquisition provides a specialised business line for water
treatment and nutrient management in the viticulture, perishable
foods and lawful cannabis space
• Fertigation is the injection of fertilizers, soil amendments, and other
water-soluble products into an irrigation system
• The acquisition consideration is equivalent to three (3) times
Hanson Fertigation’s 2017 financial year EBITDA
• The Agreed Valuation will be paid through the issue of five million
(5,000,000) fully-paid ordinary shares in the capital of RotoGro
Roto-Gro World Wide (Canada) Inc., a wholly-owned subsidiary of Roto-Gro
International Limited (“ASX:RGI”, “RotoGro” or the “Company”), has agreed to
acquire the fertigation assets and ongoing contracts of Hanson’s Water
Treatment Inc. (“Hanson”), through RotoGro’s wholly-owned subsidiary, Global
Fertigation Solutions Inc. (“GFS”).
Hanson Company Background:
Hanson’s Water Treatment Inc., a company incorporated pursuant to the laws
of the State of Nevada, USA, is located in Las Vegas, Nevada and was established
in 1957 (“Hanson”). Hanson operates the business of water treatment and
fertigation services, focused on commercial installations in the State of Nevada.
Hanson has a specialized business line for water treatment and nutrient
management in the viticulture, perishable foods and lawful cannabis space
(“Hanson Fertigation”). To date Hanson Fertigation has successfully provided
design solutions, installations and ongoing service for more than twelve (12)
licensed lawful cannabis facilities in the State of Nevada.
Fertigation Explained:
Fertigation is the injection of fertilizers, soil amendments, and other watersoluble
products into an irrigation system. The fertigation solution developed by
Hanson Fertigation is a patent-pending fully-automated nutrient delivery
system which purifies source water and adds client-specified recipes of nutrients
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to maximise yields and optimise cost efficiencies during the growth cycle of each
crop.
Details of the Transaction:
Through GFS, RotoGro has agreed to acquire one hundred percent (100%) of the
assets, intellectual property, ongoing contacts, key personnel, industry knowhow
and business goodwill of Hanson Fertigation. The acquisition consideration
is equivalent to three (3) times Hanson Fertigation’s 2017 financial year earnings
before interest, tax, depreciation and amortization (EBITDA) which is agreed to
be One Million, Seven Hundred and Fifty Thousand Australian Dollars (AUD
$1,750,000) (the “Agreed Valuation”).
The Agreed Valuation will be paid through the issue of five million (5,000,000)
fully-paid ordinary shares in the capital of RotoGro.
RotoGro has also agreed, subject to shareholder approval, to issue performance
shares which convert to ordinary shares as follows:
1. 1,000,000 Shares if GFS’s EBITDA exceeds A$2,000,000 within
18 months of the transaction completing.
2. 1,500,000 Shares if GFS’s EBITDA exceeds A$5,000,000 within
36 months of the transaction completing.
3. 2,500,000 Shares if GFS’s EBITDA exceeds A$10,000,000 within
60 months of the transaction completing.
Completion is conditional upon the following being satisfied by 31 May 2018.
1. Written consents of Hanson’s customers to the assignment
that are required under the terms of those contracts either on
an unconditional basis or on terms reasonably acceptable to
GFS.
2. GFS and Doug Meckler Hanson Fertigation key man entering
into the Employment Agreement on terms acceptable to GFS.
3. There being no material breach of any of the warranties.
4. GFS completing due diligence on the Assets and Business to its
satisfaction.
RotoGro will rely upon its existing capacity to issue to issue ordinary shares to
Hanson so that shareholder approval is not required to complete the
acquisition. The vendors will be paid US$2.2m cash in lieu of performance
shares in the event shareholders do not approve the issue of performance
shares
The President of Hanson, Stephen C. Everett states, “We are very excited with
the acquisition by RotoGro as it will accelerate the global expansion of our
patent-pending fully-automated nutrient delivery system. With more than 30
years of market-proven experience working in the water treatment, agriculture
and nutrient space starting with viticulture and perishable foods, we have been
able to drive risk reduction and economies of scale, integrating technology and
science to the art of growing.”
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Managing Director of RotoGro, Michael Carli states, “The acquisition of Hanson
Fertigation is a key milestone in building the full suite of capabilities to provide
our customers with a turnkey solution from ‘concept to harvest’. The fertigation
business is the first cornerstone in our third vertical that provides solutions to
all forms of agriculture: from field crops to greenhouses to flat deck
hydroponics. This acquisition expands the RotoGro Rotary Garden System
capabilities on an enterprise level. The opportunities for revenue growth are
immense with secured orders to date in excess of USD$1M for 2018. Building
on the focused penetration in Nevada, the opportunities across all agricultural
applications globally are very exciting
