May 29, 2007


Maple Leaf to sell feed business to Nutreco



Canada's Maple Leaf Foods said it will sell its animal nutrition business to Dutch animal feed maker Nutreco Holding N.V. for US$ 460.6 million (500 million Canadian dollars). The deal is scheduled to be sealed in July this year. 


Maple Leaf's animal nutrition business is the largest commercial feed manufacturer in Canada and produces a full line of feeds, feed additives and premixes, specialty products and pet foods at 18 plants across Canada and also in New York. It also holds 20 percent of the Canadian feed market.


The business has two of the most well-established feed brands in Canada-Landmark in western Canada and Shur-Gain in the eastern provinces-and the brands are included in the agreement, according to the announcement.


According to chief executive officer and president Michael McCain, the sale represents "another major step" in Maple Leaf's transition away from commodity activities and focus a reinvestment on its bakery, meat and meal products. The company is also restructuring its hog and pork production system which is expected to be completed by the end of 2009, McCain said.


Maple Leaf, headquartered in Toronto, Ontario reported sales that totalled $5.9 billion last year.


The acquisition, according to Nutreco's chief operating officer Juergen Steinemann, would "fit the company's business growth strategy to establish leading positions in regions where there is good growth potential and would provide a solid platform for further growth in North America".


Nutreco is a global leader in animal nutrition and fish feeds, manufacturing and marketing a full line of complete feeds and premixes for the beef and dairy cattle, poultry, swine and aquaculture industries at 75 feed plants in more than 20 countries.


It manufactures complete feeds through its Hendrix and Nanta businesses and concentrates, premixes and specialty products through Trouw Nutrition International; its fish feed production is organized through Skretting. The company is also involved in chicken production through Grupo Sada.


Nutreco was established in the management buyout of BP Nutrition from British Petroleum in 1994 and is based in the Netherlands. The company had 2006 sales totalling 3.009 billion euros ($4.4 billion, Canadian; 4.0 billion, US).


Maple Leaf, which announced its reorganization strategy last fall and put the feed operations up for sale shortly after, will maintain its two feed plants for its hog production, senior vice president for business transformation Annalisa King said. 


She stated the company plans to double-shift its pork plant in Brandon, Manitoba and is planning to sell another plant as part of the reorganization. It will also continue its internal realignment, including its Elite Swine System, according to King.


Elite is a vertically coordinated hog production system that includes company-owned production and independent producers to whom Maple Leaf provides nutrition and other management support. King said Elite will transition toward a vertically integrated system in which Maple Leaf will have 100 percent ownership of fewer hogs.