Toromont Industries Acquires Enerflex Systems Income Fund

On January 20, 2010, Toromont Industries Ltd. announced that it had completed its take-over bid for the units of Enerflex Systems Income Fund and that it owned (together with the trust units it owned prior to the offer) approximately 96 per cent of the trust units on a fully diluted basis. On February 5, 2010, Toromont elected to acquire the remaining trust units through a second step transaction. Toromont offered cash and shares for Enerflex's outstanding units. The equity of Enerflex was valued at $684 million based on the cash offer price. The combination of Enerflex with Toromont's own natural gas compression and process equipment businesses resulted in a well-capitalized global leader in the compression market.

Toromont made a proposal to Enerflex to enter into a negotiated business transaction on October 16, 2009. Shortly before making this proposal, Toromont entered into lock-up agreements with two significant unitholders of Enerflex. The trust units subject to these lock-up agreements, together with those owned by Toromont prior to making the proposal, represented over 25 per cent of the outstanding trust units.

Toromont announced its intention to make an unsolicited take-over bid on November 12, 2009 and formally commenced the offer on November 16, 2009. In its Directors' Circular dated November 30, 2009, the board of directors of Enerflex unanimously recommended that unitholders reject the Toromont offer.

On December 17, 2009, Toromont and Enerflex reached an agreement on a negotiated transaction under which Toromont agreed to revise its offer. Under the revised offer, holders of Enerflex's trust units and holders of units exchangeable for trust units had the right to elect to receive either $14.25 in cash per unit or 0.5382 of a common share of Toromont plus $0.05 in cash per unit, in each case subject to pro ration.

Toromont was represented in-house by David Wetherald, Vice President, Human Resources and Legal. Toromont's external counsel was Davies Ward Phillips & Vineberg LLP, with a team that included Kevin Thomson, Lisa Damiani, David Wilson and Tiffany Jung (M&A); Geoffrey Turner and Raj Juneja (tax); John Bodrug and Christopher Margison (competition) and Gerald Shepherd (US securities).

Enerflex was represented by Bennett Jones LLP, with a team that included Neil Stevenson, John MacNeil, Brent Kraus, Bruce Hibbard, Kristopher Hanc and Sandra Malcolm (M&A); Darcy Moch and Anu Nijhawan (tax) and Beth Riley (competition). The special committee of the Enerflex board was represented by Christopher Nixon and Keith Chatwin of Stikeman Elliott LLP.