CALGARY, Jan. 18, 2012 /CNW/ - (TSX:HEM) Hemisphere GPS today announced that it is entering the emerging data services market in precision agriculture with a purchase agreement to acquire the assets and operations of AgJunction from GVM, Inc. AgJunction, located in State College, Pennsylvania, provides a cloud-based data management software platform and wireless hardware to precision agriculture retailers and growers.
Driven by ever-increasing global food demand versus higher costs of inputs including fuel, fertilizer, pesticides and water, agriculture is increasingly becoming a high-technology business. Data services now represents an emerging growth segment in precision agriculture with market adoption driving an 80% 3-year cumulative annual revenue growth rate for AgJunction. Through this acquisition, Hemisphere GPS aims to rapidly offer its customer base connected solutions integrating location based technology hardware with cloud based wireless data management services.
Established in 2008, AgJunction has developed a patent-pending, flexible, web-based system for client, farm and field management. The system is open and cloud-based to easily capture and share data from many types of precision agriculture controllers on the farm. Effective use of precision agriculture data can result in lower costs and environmental impact through lower use of pesticides, fertilizer and fuel, and provide a higher crop yield per acre, increased profitability and lower the impact on global food costs.
Agriculture service providers including fertilizer dealers, agronomists and co-ops can work directly with growers through the AgJunction platform through private-branded portals integrated into their business systems. The timely, seamless two-way transfer of data between farm equipment and the central AgJunction repository greatly improves efficiency and accuracy in the analysis of data related to yield, soil sampling, fertility, and planting including the development of prescription maps and input for other precision agriculture techniques.
The system also streamlines retailer and farm operations with features such as equipment tracking, work order management, seed and chemical ordering, and comprehensive reporting. The AgJunction platform is a scalable system supporting private-branded precision agriculture portals for major retailers such as the Wilbur-Ellis Company, Crop Production Services (CPS) and Jimmy Sanders Inc.
"By integrating cloud-computing and location based applications, AgJunction's technology removes complexities, costs and limitations currently associated with sharing and processing precision agriculture data," said Steven Koles, President and CEO of Hemisphere GPS. "This acquisition represents tremendous strategic value by rapidly moving Hemisphere GPS towards a leadership position in this emerging precision agriculture data services sector. We will now have the capability of bringing real-time decision-making information right into the farmers cab. It also brings strategic customer relationships with agriculture retailers and offers a range of integration opportunities for our portfolio of precision agriculture solutions. For Hemisphere GPS shareholders, it creates a cloud-based computing division that provides profitable, recurring, software as a service (SaaS) license revenues."
Details of the Acquisition
Pursuant to the acquisition, Hemisphere GPS will purchase the AgJunction assets and operations for consideration at closing of US$2.0 million in cash and 5,447,410 common shares of Hemisphere GPS. As additional purchase consideration, Hemisphere GPS will pay cash earn-out payments to a maximum of US$0.5M and 2,723,705 common shares upon the achievement of revenue growth targets for each of the 2012 and 2013 fiscal years. The transaction is projected to add approximately $4.5M incrementally to Hemisphere GPS' 2012 revenues, approximately $2.5M to cashflow from operations, and be accretive to the net earnings of Hemisphere GPS for 2012 and future years. The deal is anticipated to close before February, 2012, subject to certain closing conditions, including the approval of the Toronto Stock Exchange.
AgJunction's branding and availability will remain intact as Hemisphere GPS' cloud computing division. As part of the acquisition, Mark Anderson, President and owner of GVM, will join the Hemisphere GPS Board of Directors and GVM's dealer locations will become part of Hemisphere GPS' Outback Guidance dealer network.
"Hemisphere GPS and their precision farming solutions make them a perfect complement to our AgJunction division," said Mark Anderson. "Combining the companies will contribute to strong growth in AgJunction data management services and facilitate newly integrated solutions that will enhance the value of precision agriculture solutions. Growers and their service providers are realizing that the greatest value from precision agriculture techniques can only be unlocked through the proper management of the location based agricultural data."
AgJunction has 10 employees and patent-pending technology that collectively manages over 16 million acres at 22,000 farms in the United States and Canada. For more information about AgJunction visit www.agjunction.com.
About GVM Inc.
GVM, Inc. is a private company headquartered in Biglerville, Pennsylvania. The company was founded in 1977 and designs and manufactures self-propelled fertilizer spreaders and sprayers and related equipment including the Predator and Prowler product lines. GVM's history includes many firsts - including being the first company to develop an agricultural machine with an easy-on, easy-off liquid-to-dry change-over in less than one hour. For more information on GVM visit www.gvminc.com.
About Hemisphere GPS
Hemisphere GPS designs and manufactures innovative, cost-effective GPS (GNSS) products for positioning, guidance, and machine control applications in agriculture, marine, construction, and other markets. The Company holds numerous patents and other intellectual property and owns several leading brand names, including Outback Guidance®, a leading brand in precision GPS for agriculture. The Company is headquartered in Calgary, Alberta, with major product development, sales, and marketing facilities in Arizona, Kansas, and Australia. Hemisphere GPS is listed on the Toronto Stock Exchange (TSX) trading under the symbol "HEM" and is one of the TSX Cleantech designated companies. For more information about Hemisphere GPS, please go to www.hemispheregps.com.
The above disclosure contains certain forward-looking statements that involve substantial known and unknown risks and uncertainties. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Hemisphere GPS' control, including: the impact of general economic conditions, industry conditions, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to the announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. Hemisphere GPS' actual results, performance or achievement could differ materially from those expressed in, or implied by these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceed, that Hemisphere GPS will derive there from.
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