November 10, 2010

 

Maple Leaf to sell pork processing unit

 

 

Maple Leaf Foods Inc. has announced that it will sell its Ontario pork processing business to Sun Capital Partners Inc. for about US$20 million.

 

The sale of one of the largest pork processing facilities in Canada is expected to be confirmed within the next few days.

 

The agreement also involves a long-term contract with Maple Leaf's rendering operations which collects, recycles and processes animal byproducts.

 

"This sale will complete the transformation of our fresh pork operations to focus our growth on branded, consumer-focused prepared meats and meals business," said Maple Leaf's chief financial officer, Michael Vels.

 

"We are very pleased to have secured a buyer who will continue to operate the facility, providing ongoing employment to a highly skilled work force, and an important market for Ontario's hog producers," he said.

 

After a failed attempt to unload the facility at the peak of the credit crunch, Maple Leaf Foods Inc. had announced in May that it was intending to sell its Ontario pork processing business again.

 

The Burlington facility, located west of Toronto, was put on the block in 2008 but buyers who were keen could not get the necessary financing due to the credit crunch.

 

The sale would allow Maple Leaf Foods Inc. to concentrate on its branded meat, bakery and meals products because it signifies the last key problem in Maple Leaf's restructuring of its protein business as this would allow Maple Leaf to unite its pork processing operations in one facility in Brandon.

 

The sale will decrease Maple Leaf's yearly pork processing from more than seven million hogs in 2006 to about 4.3 million hogs at the Brandon facility.

 

The plant currently has 1,000 employees and processes about 1.6 million hogs annually.

 

Maple Leaf has more than 23,000 employees globally and had sales of about US$5.2 billion in the previous year.

 

It recently announced a restructuring plan meant for reducing costs and improving profit as the company struggles with poorer sales and the high Canadian dollar. It entails shutting down some plants and consolidating operations at a new production centre.