Hemisphere GPS Inc. has signed and closed a definitive agreement to sell the business assets associated with its non-agricultural operations to the Canadian subsidiary of Beijing UniStrong Science & Technology Co. Ltd. (“UniStrong”) $14.96 million in cash. PI Financial Inc. acted as advisor on the transaction for Hemisphere GPS.
The Company also announced that it plans to change its corporate name to “AgJunction Inc.” subject to shareholder approval at its 2012 annual shareholders meeting, planned for May 2013.
Hemisphere GPS’ non-agricultural operations include the Company’s Precision Products portfolio and related infrastructure. The Precision Products segment generated revenues of approximately $13.3 million in 2012 serving marine, land survey, construction, mapping, and OEM segments.
“The decision to divest our non-agriculture operations reflects our focus on the core platforms necessary to extend our leadership in precision agriculture,” said Rick Heiniger, President and CEO of Hemisphere GPS. “The result is a streamlined business which can more effectively capitalize on the expanding market opportunities in agriculture.”
Included in the sale are the intellectual property rights associated with the non-agricultural operations necessary to support the continued growth of those operations globally, including trademarks associated with the “Hemisphere GPS” identity. UniStrong intends to name the acquired operations “Hemisphere GNSS Inc.”. The Hemisphere GPS brand was not part of the Company’s agriculture identity.
As part of the transaction, UniStrong and Hemisphere GPS have formed a strategic alliance and a collaborative business relationship covering supply chain management, customer support, non-competition, and perpetual technology cross-licensing.
“Already having an established relationship with UniStrong as one of our resellers made our alliance a win-win for both parties,” stated Mr. Heiniger. “I am very pleased to be working together in this close technology-sharing relationship.”
The Company’s existing agricultural business has not been interrupted during this process and the Company reports that ag-related revenues have increased year-to-date. The Company’s new Outback MAX product integrated with AgJunction has had a positive reception in the marketplace.
Corporate Name Change to “AgJunction”
The re-branding of the Company as “AgJunction” is an integral part of the strategic re-focusing of the Company’s resources on the significant opportunities in precision agriculture, and part of the restructuring initiated in September, 2012. The Company maintains ownership of its key patents and leading agricultural brands including AgJunction, Outback Guidance, and Satloc, which are among the most recognized names in precision agriculture.
AgJunction will retain its listing on the Toronto Stock Exchange. Coinciding with the name change, the Company plans to change its ticker symbol from “HEM” to “AJX” shortly after the shareholders meeting, subject to shareholder and TSX approval. An announcement will precede the commencement of trading under the new symbol and will formally introduce the Company’s new corporate identity.
As part of the previously announced restructuring plan, the Company has completed the transition of its Calgary-based manufacturing activities to its external manufacturing partner, and is closing its Calgary-based manufacturing activities effective today. The transition of the Company’s head office to Hiawatha, KS, continues, and the Calgary location will be officially closed on May 31, 2013. Other progress on restructuring activities has been positive and costs associated with the restructuring are expected to come in below previously announced estimates. The Company does not require additional capital to complete the restructuring.
Upon completion, savings from the overall restructuring are estimated to be approximately $7 million per annum through reduced manufacturing costs, improved gross margins and reduced operating overhead.
A further corporate update will be provided in February, 2013.