Yahoo Finance Canada’s Maple Leaf Foods to Spin Off Pork Unit Amid Growth Push
(Bloomberg) -- Maple Leaf Foods, one of Canada’s largest food companies, is spinning off its pork division in a push to expand growth opportunities while reducing exposure to volatile commodity markets.
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Maple Leaf Foods will retain a 19.9% stake in the new pork company, the Mississauga, Ontario-based company said in a Tuesday statement. The yet-to-be-named pork company will supply meat at market prices to Maple Leaf Foods while tapping its North American sales network.
The transaction will “unlock the full potential” of two businesses, Chief Executive Officer Curtis Frank said in the statement. “As separate companies, Maple Leaf Foods and the new pork company will each have exciting prospects, a sharpened execution focus with its own dedicated management team, and the financial independence to pursue its own value creation strategy.”
The deal will allow Maple Leaf Foods to move “forward as a consumer packaged goods company with significantly reduced commodity exposure,” the company said.
Shares of Maple Leaf Foods rose as much as 4.7% on the Toronto Stock Exchange, giving the company a market value of about C$2.9 billion ($2.1 billion).
Maple Leaf Foods traces roots back more than 100 years in Canada, with the brand first appearing in 1898. Today, the company employs 13,500 people and does business in Canada, the US and Asia.
The split, which is expected to be completed next year, has been approved by the company’s board and has full support of Maple Leaf Foods’ largest shareholder, McCain Capital and the McCain family. The transaction will be structured as a return of capital spinoff.
The pork company will be led by Dennis Organ, president of Maple Leaf’s pork complex and a former Smithfield Foods Inc. executive. The new pork company would have had C$1.65 billion in annual sales compared to C$3.55 billion for the remaining Maple Leaf Foods operations after a split, according to preliminary estimates for the 12 months ended March 31.
Bank of Montreal and Centerview Partners are the financial advisers for Maple Leaf Foods.
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