July 11, 2024

 

Maple Leaf Foods announces separation into two independent public companies

 
 

 

Canada-based Maple Leaf Foods Inc has announced a plan to separate into two independent public companies, aiming to unlock significant value and position each for growth.

 

Maple Leaf Foods will continue its vision of becoming the most sustainable protein company, focusing on brand-led consumer packaged goods to meet the global demand for sustainably produced protein. The company will spin off its pork business, the name of which will be announced in the coming months, to create a world-leading organisation in sustainable meat production.

 

"This transaction is the start of a new era to unlock the full potential of two outstanding businesses, each with a distinct value proposition and growth opportunities," said Curtis Frank, President and CEO of Maple Leaf Foods. "As separate companies, Maple Leaf Foods and the new Pork Company will each have exciting prospects, a sharpened execution focus with dedicated management teams, and the financial independence to pursue their own value creation strategies, all with an uncompromising commitment to safety and sustainability."

 

Maple Leaf Foods will retain a 19.9% ownership position in the new Pork Company. The two companies will enter into an evergreen pork supply agreement, ensuring a secure supply of high-quality, sustainable pork for Maple Leaf Foods' Prepared Foods business while allowing the new Pork Company to expand its business globally. Maple Leaf Foods will also provide brokerage services in North America and other services to the new Pork Company.

 

The plan, expected to be completed in 2025, has been approved by Maple Leaf Foods' board of directors and has the full support of its largest and controlling shareholder, McCain Capital Inc and the McCain family.

 

Maple Leaf Foods will continue to be led by Curtis Frank, president and CEO; Adam Grogan, president and COO; and David Smales, CFO. The new Pork Company will be led by Dennis Organ, who joined Maple Leaf Foods in February 2023 as president, Pork Complex, and has over 27 years of experience in the food industry.

 

"This is the right transaction at the right time as we move forward with our sustainability vision, seeking to create value for all stakeholders," said Michael H McCain, executive chair of Maple Leaf Foods. "Our shareholders will be able to participate in two strong, independent, sustainable, and purpose-driven businesses, each with a clear mandate and investment profile."

 

Following the transaction, Maple Leaf Foods will focus on being a brand-led consumer packaged goods company, supported by leading brands and market shares in both meat and plant protein, with a strategic emphasis on driving growth in sustainable meats, expanding in the US market, and diversifying its protein product portfolio.

 

The new Pork Company will pursue its growth prospects as an independent company. It is a leader in sustainably produced, premium quality, value-added pork products and a key supplier of Raised Without Antibiotics (RWA) and conventional pork products. The new company will invest in both organic and inorganic opportunities to increase volumes, optimise operations, and build on its industry-leading sales mix and margins.

 

The separation will create value by building on the momentum in both businesses, delivering two clear and compelling investment opportunities with distinct value propositions and growth strategies, sharpened execution focus, and continuing best-in-class sustainability practices.

 

The transaction will be subject to shareholder approval and other customary approvals. Upon completion, existing Maple Leaf Foods shareholders are expected to receive a pro-rata distribution of shares in the new Pork Company, retaining a 19.9% position.

 

BMO Capital Markets and Centerview Partners are serving as financial advisors to Maple Leaf Foods, with Blake, Cassels & Graydon LLP serving as legal counsel. Torys LLP is serving as legal counsel to the Special Committee.

 

RBC Capital Markets has provided an opinion that the transaction is fair, from a financial point of view to the shareholders of Maple Leaf Foods other than the McCain Shareholders.

 

-      Maple Leaf Foods