One of Canada’s largest pork production and meat companies is planning to split into two independent businesses.
Mississauga, Ont.-based Maple Leaf Foods is proposing to spin off its pork business and focus on consumer packaged protein food operations, creating two independent publicly-traded companies.
Maple Leaf Foods would “continue to pursue its vision to be the most sustainable protein company on Earth, now as a more focused, brand-led consumer packaged goods company that will meet the world’s growing need for sustainably produced protein.”
The spinning off would “unlock significant growth potential” for a yet-to-be-named pork production business, the company says.
“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,” says Curtis Frank, President and CEO of Maple Leaf Foods, in a July 9 press release. “As separate companies, Maple Leaf Foods and the new Pork Company will each have exciting prospects, a sharpened execution focus with its own dedicated management team, and the financial independence to pursue its own value creation strategy, all with an uncompromising commitment to safety and sustainability.”
The proposal would see Maple Leaf retain 19.9 per cent ownership in the pork business for at least two years and an evergreen supply agreement between both companies. Maple Leaf says it would serve as an anchor customer for the pork business, while in turn providing brokerage services to the pork company.
The company says the plan has already been approved by Maple Leaf’s board of directors, and has full support of Maple Leaf’s largest shareholder, McCain Capital Inc. and the McCain family.
“I am passionate about both of these businesses and have absolute confidence in the powerful potential of this transaction,” says executive chair Michael McCain.
Dennis Organ, former Smithfield Foods CEO and current president of Maple Leaf Foods’ Pork Complex, would serve as the incoming CEO of the new pork company.
“We have seen positive momentum in the business in recent quarters as pork markets continue to normalize following several years of material disruption, and we are extremely well-positioned as a standalone company to leverage our unique advantages to drive growth and generate value,” says Organ.
For context, the company says the new pork company would have had EBIDTA of around $70 million based on preliminary estimates for the 12-months ending March 31, 2024, while Maple Leaf Foods, excluding the pork business, would have had EBIDTA of $395 million.
Maple Leaf expects the separation into two companies will be completed in 2025, pending shareholder and other regulatory approvals.
According to Maple Leaf’s 2023 animal care performance report, the company had approximately 200 pig production locations, and two pork processing plants (Brandon, Man., and Lethbridge, Alt.). Maple Leaf also works with independent producers to supply processing operations.
The initial July 9 announcement did not indicate how the separation would affect its chicken production and processing operations.
Maple Leaf employs around 14 thousand people, doing business in Canada, the U.S., and Asia. The company’s consumer brands include Maple Leaf, Maple Leaf Prime, Maple Leaf Natural Selections, Schneiders, Schneiders Country Naturals, Mina, Greenfield Natural Meat Co., Lightlife and Field Roast.
