The North West Company Inc. (TSX: NWC) has entered into an agreement to acquire North Star Air Ltd. (NSA), a Thunder Bay based airline, providing cargo and passenger services within northwestern Ontario, the company said.
North West will acquire NSA for approximately CAD 31m (subject to customary closing adjustments) plus closing expenses. North West also expects to make immediate follow-on investments of approximately CAD 14m for additional airplane and hub capacity.
In aggregate, these investments are expected to deliver approximately CAD 8m of annualized EBITDA, plus approximately CAD 2m in avoided carrier cost increases.
North West will pay for the purchase price and follow-on investments in cash, financed through existing credit facilities.
NSA is a privately-held airline that operates a fleet of 11 aircraft providing cargo and passenger services, primarily within northwestern Ontario, with bases in Thunder Bay, Pickle Lake, and Red Lake.
The North West Company, through its subsidiaries, is a retailer of food and everyday products and services to rural communities and urban neighbourhoods in Canada, Alaska, the South Pacific, and the Caribbean, with annualized sales of approximately CAD 1.8bn.