AgFeed to buy Pine Ridge Farms, Kansas City Sausage Co.
July 18, 2011
by Bryan Salvage
NEW YORK – AgFeed Industries Inc., an international agribusiness with operations in the US and China, has entered into separate non-binding letters of intent to acquire Pine Ridge Farms LLC (PRF) and Kansas City Sausage Company LLC (KCS). Combined, both businesses are expected to add more than $180 million of annualized revenue and more than $13 million of EBITDA to AgFeed’s results.
These acquisitions mark AgFeed's entry into the harvest and processing segment of the pork business. They will provide the base of human resources necessary to expand this business and develop this segment of the company’s business as an adjunct to the western-style hog farms under development in China, according to AgFeed. This processing capability is the necessary precursor to the company's global market strategy.
Des Moines, Iowa-based PRF is a leading specialty hog processing facility established in January 2004. It has processing capacity of more than 3,000 animals per day. PRF manufactures pre-rigor for sausage, fresh and frozen pork products, and private-label products. PRF said it has initiated a series of innovative projects and initiatives including processing pork hides, custom ham boning operations and butcher pork processing for a major pork production company to minimize the earnings volatility common to commodity businesses. PRF currently exports products to China and other Pacific Rim countries.
Kansas City, Kan.-based KCS began operations in 2009 and is arguably one of the newest and most efficient and well-designed sausage facilities in the US, AgFeed claims. KCS is a private-label sausage company. With customers including major retailers and food service companies, KCS sells products domestically and also exports products to customers in Canada, Mexico, the Caribbean and the Pacific Rim.
The transactions will be structured as the sale of assets by PRF and KCS to AgFeed. Completion of these transactions is subject to conditions.
In other news, AgFeed has made several organizational changes. Its board of directors announced executive promotions and reassignments. In addition the Board elected a new independent director. These organizational changes are intended to align the company's personnel with its continued transformation, allowing it to respond to the changing international operating environment and its strategy of operating at numerous points of the pork value/supply chain.
The board has appointed one of its current members, K. Ivan Gothner, as vice chairman to work along side John Stadler, AgFeed's chairman and interim CEO. Glenn McClelland, current president and CEO of the company's US-based hog production business, M2P2, has been appointed chief operating officer, while Clay Marshall, current chief financial officer of M2P2, has been appointed chief financial officer of Agfeed.
The board also appointed David Michael Johnson as a director. He is currently the president and CEO of Cattlco LLC, which is among the 25 largest cattle feeding operations in the US.