Allied Products Corp. said Thursday it agreed to buy substantially all the operating assets of White Farm Equipment Co., the Oak Brook-based concern operating under Chapter 11 of the Bankruptcy Code.
Terms were withheld, but the acquisition broadens Chicago-based Allied Products` presence in the farm-equipment market, giving it a capability to make farm tractors.
The acquisition needs the approval of the U.S. Bankruptcy Court. Richard Drexler, president of Allied Products, said he expects the court`s approval before late December.
In light of the proposed acquisition, Drexler said Allied Products would withdraw its recent filing with the Securities and Exchange Commission for an offering of 1 million common shares. The company said it plans to make a nonconvertible preferred stock offering to finance the White Farm acquisition. Allied Products has found a profitable niche in the depressed farm-equipment market by making hay tools, rotary cutters and tillage equipment. The company`s agriculture group posted operating income of $21 million last year on sales of $108 million.
”We think White Farm is a significant opportunity,” Drexler said.
He noted that White Farm continued to post sales in excess of $100 million in recent years, despite the depressed farm economy and its own precarious financial condition–”a testament to the loyalty of its dealers and farm customers,” Drexler said.
As part of the agreement, Allied Products would buy White Farm`s tractor plant and foundry in Charles City, Ia., a major parts depot in Hopkins, Minn., tooling for all of White Farm`s products and all of White Farm`s inventories at its plants. The acquisition doesn`t include any White Farm receivables or its farm-implement plant in South Bend, Ind.
The purchase would mark Allied Products` third acquisition of a farm-equipment manufacturer in two years. The company bought Kewanee Farm Equipment Co., based in Kewanee, Ill., in 1983 and Coldwater, Ohio-based New Idea Farm Equipment Co. last year.
