TORONTO – Maple Leaf Foods agreed to sell Rothsay, the company's rendering and biodiesel business, to Irving, Texas-based Darling International, Inc. Darling International is the largest provider of rendering and bakery residuals recycling services to the US food industry.
Rothsay is a leading rendering and biodiesel producer in Canada. The business includes six rendering plants in Manitoba, Ontario, Quebec and Nova Scotia and a biodiesel facility in Quebec. Approximately 550 people work at Rothsay. Those workers will transition to Darling once the transaction closes by the end of the year. Maple Leaf plans to enter into a long term contract with Darling to receive by-products recycling services at competitive market rates.
"The sale of our rendering and biodiesel business supports our strategy to focus on effective capital deployment and profitable growth in the consumer packaged foods market," said Michael McCain, president and CEO of Maple Leaf. "We are delighted to have concluded almost a year-long process with an agreement with Darling, the North American leader in food waste recycling. The sale will support future investments in our consumer facing businesses and allow Darling to build on Rothsay's strong capabilities and deep customer relationships."
The deal is worth an estimated $645 million, according to Maple Leaf. The money will initially be used to pay down debt. The company said that upon completion of the prepared meats strategy, management will consider additional uses for the excess capital. This could include reinvesting in its core consumer packaged food businesses or returning excess capital to shareholders, the company said. Rothsay had EBITDA of approximately $85 million in 2012.
Darling International recycles beef, poultry and pork by-products into useable ingredients such as tallow, feed-grade fats, meat and bone meal, poultry meal and hides. The company also recovers and converts used cooking oil and commercial bakery residuals into valuable feed and fuel ingredients.