Toronto-area meat processor Sofina Foods has signed a $75 million cash-and-bonds deal to take over Edmonton-based poultry packer Lilydale Inc.
Privately-held Sofina, which processes and sells pork, beef and poultry products for the domestic, U.S. and Japanese markets, has offered Lilydale’s shareholders $10 cash and about $5.43 in debentures per share.
The buyer will also take on Lilydale’s outstanding debt, bringing the total value of the deal to over $130 million, the two companies said Thursday.
The deal also commits Sofina to invest another $20 million over the next two years into Lilydale, to support its operations and “facility improvements.”
Shareholders of Lilydale, which demutualized out of a farmer co-op into an investor-owned corporate structure in 2005, are to vote on the Sofina deal at a meeting “on or around” April 6.
Pending regulatory approval, the two companies said they expect to close the deal in April.
Sofina president Michael Latifi, in Lilydale’s release, described the Lilydale brand as “a natural fit to complement Sofina’s offerings,” citing Lilydale’s geographic coverage in Western Canada and “strong brand presence” in the marketplace.
Lilydale’s poultry slaughter and processing facilities include plants at Edmonton (turkeys, broilers, fowl), Calgary (chicken), Abbotsford (turkeys), Port Coquitlam, B.C. (chicken), and Wynyard, Sask. (broilers). It had also owned a poultry plant northwest of Montreal since 2004 but sold it in January last year.
Lilydale also runs hatcheries at Edmonton, Wynyard (140 km northwest of Yorkton) and Abbotsford.
The company’s poultry, deli, sausage and meat snack brands include Lilydale, Tailgate, Daystarters, Country Fair, Roast + Boast and ZamZam. In all, the meat and hatchery operations employ about 2,100 people across the West.
“Fair and appropriate”
The firm formed in 1940 as Alberta Poultry Producers Ltd. and bought its first plant in Edmonton the following year. It became Lilydale Co-operative Ltd. in 1976, named for then-manager J.I. Wright’s Saskatchewan hometown, about 70 km southeast of Lloydminster.
Sofina and Lilydale described a combined company as “a strong national champion in the Canadian meat industry,” with combined sales over $800 million and a workforce of over 3,300. The business would supply retail and foodservice markets across Canada and into the western U.S. through 12 processing plants.
Sofina’s brand roster includes Cuddy, Vienna, Fletcher’s and Quality Meats, as well as its private-label products.
Sofina, based at Markham, near Toronto, runs plants at Vancouver, Brampton, London and Dublin, Ont. (northwest of Stratford), plus a Fletcher’s Fine Foods plant at Auburn, Wash., northeast of Tacoma, and a Vienna plant at Scarborough, Ont.
“Over the past several years, Lilydale has been approached by a number of different companies regarding potential transactions,” Lilydale board chairman Don Sundgard, a chicken farmer and grain grower from Standard, Alta., said in the companies’ release.
Lilydale, however, “did not feel that any of those potential suitors were the right fit until now,” he said.
Sundgard said the board finds that “the consideration to be paid and the terms of the arrangement are fair and appropriate and should be seen as very attractive to all Lilydale stakeholders, from its shareholders through to its customers.”
The debenture expected to go to Lilydale shareholders would bear interest at four per cent payable at maturity, expected in October 2011.