Maple Leaf to purchase Puratone
Canada’s Maple Leaf Foods has entered into a definitive agreement to acquire the Puratone Corp., the third-largest hog production company in Manitoba. The transaction is reported at $42 million, including livestock, facilities and interests in some joint ventures. The purchase is expected to be completed by the close of November, following court and regulatory approvals.
Puratone, headquartered in Niverville, Manitoba, operates about 50 barns in the province, which are in close proximity to Maple Leaf's Brandon plant. Puratone produces approximately 500,000 hogs annually, as well as operating three feed mills to support the company’s hog production units. It produces about produce about 25,000 tons of livestock feed a year.
Puratone started in 1973, filed for bankruptcy protection on Sept. 13, and had 30 days to restructure or sell its assets. Just one day before Puratone’s filing, Big Sky Farms, Canada’s second-largest pork producer entered into receivership. Based in Humboldt, Saskatchewan, it produces roughly 1 million pigs annually and accounts for 40 percent of Saskatchewan's total hog production.
Both Canadian producers cited high production costs due to this summer’s U.S. drought and its impact on feed-grain supplies and prices, as putting them over the edge.
With this acquisition, Maple Leaf will own approximately 30 percent of its hog supply for the Brandon plant and in total will produce about 1.2 million hogs annually.
"This acquisition will ensure a consistent supply of hogs to our processing facility in Brandon (Manitoba), which is an integral supplier to our value added prepared meats and pork business," says Michael McCain, Maple Leaf president and chief executive officer. "We look forward to welcoming Puratone employees to Maple Leaf and benefiting from their experience and strong commitment to best practices."
Puratone’s President and Chief Executive Officer Ray Hildebrand said, "The agreement reached with Maple Leaf represents a tremendously positive outcome and we are very pleased with the stability it provides our stakeholders, particularly our employees."
Headquartered in Toronto, Canada, Maple Leaf Foods employs an estimated 19,500 people at its operations across Canada and in the United States, the United Kingdom, and Asia. In 2011, Maple Leaf reported sales of $4.9 billion.
The matter of compensating Puratone's creditors was not addressed in the purchase announcement. It is reported that Puratone owes Farm Credit Canada, Bank of Montreal and Manitoba Agricultural Services Corporation a total of $86 million. Estimates are the millions also are owed to numerous other creditors, “mainly Manitoba farmers and businesses,” reports Pembina Valley Online.
According to the Manitoba Pork Council, record losses in Manitoba's hog industry has forced hundreds of producers to leave the business. MPC says 15 years ago the province had nearly 5,000 hog producers, today there are less than 500.