Highwood is in High River Alberta and has annual sales of over C$3.5mln, as well as strong profitability, and very capable operational leadership, said Atlas.
Under the deal, the company will acquire all the issued and outstanding shares of Highwood for C$1.25mln in cash and issue 1.5mln in shares on closing.
As additional consideration, Highwood shareholders, on the first and second anniversary of closing, will receive a further C$250,000 and 385,000 share purchase warrants for $0.65 per share.
That's provided that Highwood achieves underlying earnings (EBITDA) of C$450,000 during the first year, and C$500,000 during the second year.
Atlas will be entitled to carry out due diligence until February 28 this year.
"The acquisition of Highwood is another key step in our acquisition program to significantly broaden our geographic reach," said Guy Champagne, president of Atlas.
"We are extremely pleased to be acquiring Highwood as it is highly accretive and provides us with a strategic base from which to expand in Alberta."
Also in today's statement, Atlas Engineered said it had hired capital markets veteran Kevin Smith as a new director.
Smith is executive vice-president and chief financial officer for the Intracorp Group of Companies, a real estate development company with headquarters in Vancouver and with operations across North America.
Shares in Atlas eased 1.85% to C$0.53..