Canada’s biggest grain handler is getting out of the North American livestock feed business.
Viterra on Wednesday announced it will sell all its Canadian and U.S. feed operations, including mills and other facilities in three provinces and three states, to a new partnership of the feed operations’ management and Birch Hill Equity Partners, a Toronto-based investment firm.
The new partnership, dubbed Hi-Pro Feeds LP, will get six feed mills, at Ste. Anne and Carman, Man., Sherwood Park, Olds and Lethbridge, Alta., and Chilliwack, B.C., plus a premix facility at Ponoka, Alta., two mill stores at Chilliwack, and Viterra’s feed products office at Okotoks, Alta.
Viterra’s U.S. assets going to Hi-Pro include another six feed mills, at Dexter and Clovis, N.M., Cheynne, Okla., and Lubbock, Friona and Comanche, Tex., plus a “commodity blending” and premix site at Clovis.
A Viterra spokesperson, contacted Wednesday, said the specific financial terms of this deal won’t be released, but added that “a competitive sale process was implemented and the valuation is in line with industry multiples.”
In its fourth-quarter financials, released last month, Calgary-based Viterra had booked a “goodwill impairment” of $8 million on its feed operations in Western Canada, citing “continued intense competition and overcapacity in the feed market.”
The company said at the time that it expected “challenges” in the feed business to continue in 2012, with overcapacity ratcheting up competition and margin pressures, but it would “take steps to mitigate the effects of these issues.”