ADF to spend $35M over 24 months on Groupe LAR plant

Executive Summary

• ADF Group Inc. completed the acquisition of Groupe LAR Inc. on September 18, 2025, for a total consideration of $20.4 million.
• The transaction involves a cash payment of $16.4 million and the issuance of 449,944 subordinate voting shares valued at $4 million.
• ADF plans to invest over $35 million at LAR’s main plant over the next 24 months to double LAR’s order backlog, which stood at $104.5 million as of July 31, 2025.

Key Details

• Transaction Structure:
  • Total purchase price: $20.4 million.
  • Base consideration: $19 million.
  • Closing adjustment: $1.4 million (related to working capital expenses).
  • Payment method:
    • Cash: $16.4 million (paid from ADF’s available cash).
    • Equity: 449,944 subordinate voting shares, representing $4 million based on the average closing price of ADF shares on the Toronto Stock Exchange during the five trading days preceding August 29, 2025.
• Target Company (LAR) Financials & Operations:
  • Established in 1942; based in Metabetchouan, Quebec.
  • Sectors: Machining, welding, industrial mechanics, and design/fabrication/installation of mechanically welded steel structures.
  • Primary market focus: Large-scale hydroelectricity; also offers customized overhead crane solutions for heavy industry.
  • Fiscal Year 2024 Revenues: $80.9 million.
  • Order Backlog: $104.5 million as at July 31, 2025.
  • Current Employees: 200 at the Metabetchouan plant.
• Growth Strategy & Capital Investment:
  • Goal: Double LAR’s order backlog by January 31, 2027.
  • Capital Expenditure: Over $35 million planned for LAR’s main plant in Saguenay-Lac Saint-Jean over the next 24 months.
  • Investment Purpose: Increase fabrication capacity and modernize equipment.
  • Construction Timeline: New buildings expected to start in April 2026; new equipment expected by December 2026.
  • Market Context: Leveraging Hydro-Quebec’s $35 billion investment plan in hydroelectric dam renovation and new projects by 2035, along with potential U.S. tariff-driven shifts toward local Canadian suppliers.

Notable Quotes

• "As previously mentioned, we are convinced that this transaction will create significant synergies between ADF and LAR and will have a positive contribution to ADF's net results and will diversify ADF's offer where U.S. tariffs threats are concerned while maintaining 200 well-paying jobs in the greater Saguenay-Lac Saint-Jean region and even growing this number," said Jean Paschini, chairman of the board of directors and chief executive officer of the corporation.
• "Both companies share common values and we intend to leverage our experience and expertise to benefit not only from operational synergies but in order to grow the consolidated revenues and results to the benefit of our shareholders," concluded Mr. Paschini.