The largest rendering company in the U.S. has signed a cash deal to buy Rothsay, the rendering arm of food processing giant Maple Leaf Foods and Canada’s top animal byproduct recycler.
Texas-based Darling International will pay $645 million for Rothsay, including its six rendering plants in Manitoba, Ontario, Quebec and Nova Scotia and its biodiesel facility in Quebec.
The deal is expected to close by year’s end, after which Maple Leaf plans to enter into a long-term contract with Darling for byproducts recycling services at “competitive market rates.”
Among other closing conditions, Darling noted the deal will require review and approval from Canada’s federal Competition Bureau.
Rothsay, which had earnings before interest, taxes, depreciation and amortization of about $85 million in 2012, employs about 550 people across Canada, who will “transition” to work for Darling.
Maple Leaf said it will at first use proceeds from the sale to pay down debt. The company has been in streamlining mode in recent years, aiming to focus on its prepared meats and packaged foods businesses.
Once Maple Leaf carries out its prepared meats strategy, it said it will consider “appropriate deployment of excess capital” from the sale, such as reinvesting in the consumer packaged food businesses or “returning excess capital to shareholders.”
Maple Leaf CEO Michael McCain said the Rothsay sale process has taken almost a year. It will “support future investments in our consumer-facing businesses and allow Darling to build on Rothsay’s strong capabilities and deep customer relationships,” he added.
Rothsay collects and processes raw edible and inedible animal materials into finished products of fats and proteins, as well as biodiesel, for sale into domestic and international markets including the U.S., Europe, Mexico and South America.
Merging Rothsay into Darling “will create North America’s leading provider of independent rendering and recycling services,” Darling CEO Randall Stuewe said in a separate release, describing the Rothsay deal as “an exceptional honour.”
Darling said it will finance the deal through a new revolving credit facility and bank loan, to be entered when the deal closes.
Darling is well-known in the U.S. as a recycler of beef, poultry and pork byproducts into tallow, feed-grade fats, meat and bone meal and hides, and also recycles used cooking oil and commercial bakery residuals into feed and fuel ingredients.
Buyers of Darling’s products include agricultural, pet food, leather, oleo-chemical and biodiesel manufacturers worldwide. Darling also provides grease trap collection services and sells used cooking oil collection equipment to restaurants. — AGCanada.com Network
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