January 11, 2013

Canada's Olymel acquires hog producer Big Sky

After no superior bids emerged, Olymel will buy Big Sky Farms out of receivership for US$65.25 million, in a deal that will likely close by the end of January.

This is according to the receiver, Ernst and Young senior vice-president Kevin Brennan, on Wednesday (Jan 9).

Privately-held Olymel made the offer in October, kicking off a sales process that would have led to an auction if there had been a higher bid. The Montreal-based company currently does not raise hogs, but operates a large hog-slaughter plant at Red Deer, Alta.

Big Sky entered receivership in early September after piling up US$69 million in debt to secured creditors. Soaring feed costs left the company, and many other hog farms in North America, unable to pay their bills.

A severe drought in the US decimated crops last year, which led to higher costs for grains used to feed pigs.

Manitoba hog producer Puratone Corp. entered court protection from creditors last year, and was purchased by pork processor Maple Leaf Foods.

Another large Canadian hog farm and pork processor, Manitoba-based HyLife, sold a minority stake in the company to Japanese customer Itochu Corp. this week.