Opta Minerals acquires Babco Industrial for $18.9M

WATERDOWN, Ont. - Opta Minerals Inc. (TSX:OPM) says it has acquired Babco Industrial Corp., a Regina-based industrial processor and supplier of petroleum coke, synthetic slag, sand and crushed graphite.

The pricetag of the deal, announced Monday, is $18.9 million.

Of that total, $17.6 million in cash will be paid when the transaction closes and $1.3 million if the Regina company meets its financial targets over a five year period.

Babco employs 25 people and has a plant that can be expanded to produce more materials used in making and hardening steel.

Opta said the deal will help boost its mill and foundry business and expand the Ontario company's position as a key service provider to the North American steel sector.

"Babco is a great strategic fit and will be easily integrated with our other mill and foundry businesses, further expanding our geographic reach and customers serviced within Canada and the United States," said David Kruse, president and CEO of Opta.

Opta provides materials for use primarily in the steel, foundry, loose abrasive cleaning and municipal water filtration industries. The company currently has plants in Ontario, Quebec, in several U.S. states and Europe.

The company, based in Waterdown, Ont., is 66.4 per cent cent owned by SunOpta Inc. (Nasdaq:STKL; (TSX:SOY), a producer of organic foods.

SunOpta did a strategic review of Opta last year but decided to keep the company when it looked like it could make some acquisitions and grow its business.

SunOpta president and CEO Steve Bromley said Monday the decision to keep Opta "was due in part to the belief that a number of near-term growth opportunities, when completed, would increase Opta's overall value."

Late last year, Opta acquired Inland RC LLC, a Cleveland-based supplier to the mill and foundry industry.

With the Babco deal, Bromley said, "We are confident that this acquisition combined with other initiatives should result in increased shareholder value in Opta and we will continue to assess options for the Opta business in the future."