U.S. animal feed giant to snap up Ridley

Canadian/U.S. livestock feed firm Ridley Inc. is set to become part of animal nutrition giant Alltech’s total mixed ration.

Lexington, Ky.-based Alltech on Thursday announced a friendly cash deal to buy all outstanding Ridley shares at $40.75 each, for a total payout to Ridley shareholders of about $521 million. Ridley’s TSX-traded shares closed Wednesday at $33.94.

The deal, court-approved under Manitoba’s Corporations Act, is expected to close by mid-year, pending approval from federal regulators and a vote by Ridley shareholders.

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Fairfax Financial Holdings, the Toronto financial services firm that today owns about 78 per cent of Ridley, has already made a deal committing its shares and its vote to the Alltech offer.

Ridley’s board has also approved the deal and recommended that minority stakeholders support it. A circular explaining the deal is to be mailed to those shareholders next month.

Already billed as one of the biggest commercial feed businesses in North America, Ridley processes and sells complete feeds, premixes, feed supplements, block supplements, animal health products and feed ingredients for use by livestock producers and horse and pet breeders.

Its Canadian livestock feed business, Feed-Rite, is tied up in a joint venture formed in 2012 with London, Ont.-based Masterfeeds, which in turn is controlled by Omaha co-operative Ag Processing Inc.

The Masterfeeds/Ridley business, jointly Canada’s second-biggest feed company, operates out of London under the Masterfeeds name. Ridley also holds a non-controlling stake in Masterfeeds.

“Investing in science”

Ridley’s other operations include its block supplement business, making and selling blocks, molasses and loose mineral products under the Sweetlix, Ultralyx, Crystalix and Stockade brands; its Illinois-based feed ingredients business, which sells vitamin and trace mineral premixes into Canada and the U.S.; and its U.S. livestock feed arm, Hubbard Feeds.

“Alltech is the technological leader with a broad global footprint so by uniting forces we will create a scalable platform to grow and market solutions to enhance the profitability of producers,” Ridley CEO Steve VanRoekel said in a release.

“We are also joining a financially strong company that is committed to investing in science and innovation so that we can deliver the most advanced animal nutrition solutions.”

Privately-held Alltech operates in Canada out of offices in Calgary and Ste-Hyacinthe, Que. In North America, it has hands in animal feed and health products, including the aquaculture and pet food segments; crop inputs, including biological crop protection products and nutrients; and a Lexington-based brewing and distilling business, making beer and bourbon.

Alltech is also on an aggressive expansion track worldwide, recent purchases including Australian feed premix firm Lienert, British farm environmental assessment firm E-CO2 Project Ltd. and South African crop input distributor Improcrop.

“With Ridley’s leading animal nutrition supplements, block products, extensive livestock and poultry producer distribution network and on-farm presence, we will be able to bring our advanced nutrition technology to market faster and more effectively,” Alltech president Dr. Pearse Lyons said in the same release.

Alltech noted it today puts about 10 per cent of gross revenue into product research and development, “more than any other company in the industry,” with a research team of about “150 Ph.D.s.”

Ridley, meanwhile, sports a technical team of over 40 “advanced degree” staff who have developed “some of the industry’s best-selling and most widely-recognized blocks and nutrition supplements.”

“This deal will further enhance Alltech’s primacy in science and allow it to deliver this to a broader range of livestock and poultry producers in the U.S. and bring more advanced animal nutrition solutions to countries across the globe,” the companies said.

“Few opportunities”

Ridley Inc. today keeps head office space in both Mankato, southwest of Minneapolis, and in Winnipeg, where its Feed-Rite feed manufacturing arm began operating in 1939. Ridley’s North American business was formed when Australia’s Ridley Corp. bought Feed-Rite in 1994.

Ridley Inc. went public on the TSX in 1997 and continued buying up feed milling and block manufacturing businesses in both Canada and the U.S. Its Australian parent sold its stake to Fairfax in 2008.

Ridley’s Canadian business, along with the Canadian government, was a target of co-ordinated class-action suits by cattle producers in 2008 stemming from the discovery of BSE (bovine spongiform encephalopathy) in Canada’s domestic cattle herd.

Ridley settled those suits out of court in 2009 for $6 million, admitting no liability or wrongdoing, and has since said it will still “contest any allegation it was responsible for the plaintiffs’ damages.”

Alltech and Ridley combined would have presence in 128 countries and about 4,200 employees worldwide. Alltech noted it has “more than doubled” its sales in the past three years and is “on target” to reach US$4 billion in annual sales in the next few years.

Ridley Inc., meanwhile, booked 2014 profit of US$20.67 million on revenue of $568.69 million, up from $18.5 million on $574.75 million in 2013.

Ridley had said in its year-end report that acquisitions remained a “key element” in its growth and shareholder value strategy, though it saw “few such opportunities of interest” in 2014. — AGCanada.com Network

 

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