WINNIPEG — Brazilian company Marcopolo SA will buy a 19.9% stake in New Flyer Industries Inc., the Winnipeg-based transit bus manufacturer, for $116 million.
The two companies also signed an agreement to explore opportunities to co-operate on engineering, technical, purchasing and operational matters.
Marcopolo is one of the world’s largest bus manufacturers.
New Flyer, with operations in Canada and the US, says it plans to use the Marcopolo investment to support its growth and diversification.
“This investment will allow us to be more aggressive in executing our growth, diversification and new product development agenda while giving us timing flexibility in drawing the second portion of the funds to ensure that the additional dividend requirements can be better matched to cash flows generated from the use of those funds,” president and CEO Paul Soubry said in making the announcement
Marcopolo CEO Jose Rubens de la Rosa said the investment is in line with Marcopolo’s growth strategy and marks its definitive entry into the US and Canadian markets, “ two of the most sophisticated and advanced in the world.”
The investment allows Marcopolo to nominate a member to the New Flyer board as long as it still holds a 10% stake and grants Marcopolo rights to maintain its interest in New Flyer.
Meanwhile, Marcopolo has agreed to certain restrictions including a requirement to hold the shares it acquires for at least two years and a restriction on acquisition of additional New Flyer securities and certain other actions for a period of at least two years.
© 2013 The Canadian Press