Maple Leaf Foods to spin off pork business into new company

Firm will retain a 19.9% ownership position.

July 10, 2024

6 Min Read

Maple Leaf Foods Inc. has announced a plan to unlock significant value by separating into two independent public companies, each primed for growth and positioned to be a leader in its field.

The company notes it will 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. By spinning off its pork business, the name of which will be announced in the coming months, Maple Leaf Foods will unlock significant growth potential by unleashing a world-leading organization which produces sustainable meat the right way and can fully take advantage of its own unique business model to unlock its own significant growth potential.

“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,” said Curtis Frank, president and CEO of Maple Leaf Foods. “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.”

Maple Leaf Foods will retain a 19.9% ownership position in the new pork company, and the two companies will enter into an evergreen pork supply agreement which will deliver value for both businesses, while also allowing them to pursue their individual value creation opportunities. Under this agreement, the new pork company will continue to provide Maple Leaf Foods with a secure supply of high-quality, sustainable pork at market prices, to meet the needs of its prepared foods business, providing the new pork company a strong anchor customer while allowing it to grow its already material business with customers around the world. Maple Leaf Foods will in turn provide the new pork company with brokerage services in North America, as well as certain other services.

The plan to proceed with the separation, which is expected to be completed in 2025, has been approved by the board of directors of Maple Leaf Foods, on the recommendation of a special committee of the board, composed entirely of independent directors, and has the full support of Maple Leaf Foods’ largest and controlling shareholder, McCain Capital Inc. and the McCain family.

Maple Leaf Foods will continue to be led by Frank; Adam Grogan, president and COO; and David Smales, CFO. The new pork company will go forward with a strong and experienced management team led by Dennis Organ, incoming CEO of the new pork company. Organ joined Maple Leaf Foods in February 2023 as president, pork complex, and is a distinguished industry executive with more than 27 years of experience in the food industry, including 11 years with Smithfield Foods, where he held a variety of senior leadership roles, including chief operating officer and chief executive officer.

“This is the right transaction at the right time as we move forward with our sustainability vision, seeking to create value for all stakeholders,” said Michael H. McCain, executive chair of Maple Leaf Foods. “Under Curtis’ leadership, Maple Leaf Foods is on a path to deliver best-in-class consumer packaged goods performance, while the new pork company, under the leadership of Dennis, will be unleashed to leverage its unique capabilities and industry-leading performance to take advantage of new prospects for growth.

“I am passionate about both of these businesses and have absolute confidence in the powerful potential of this transaction,” continued McCain. “Our shareholders will be able to participate in not one, but two strong, independent, sustainable and purpose-driven businesses, each with a clear mandate and investment profile, and all our stakeholders will participate in the shared value we will generate.”

The separation will create value by building on the momentum in the businesses to deliver:

  • Two clear and compelling investment opportunities, each with a distinct value proposition and growth strategy.

  • Sharpened execution focus from dedicated management teams.

  • Continuing best-in-class sustainability practices at both companies and enduring commitments to continue to lead in sustainability.

Following the completion of the transaction, Maple Leaf Foods will go forward as a focused, purpose-driven consumer packaged goods company, supported by leading brands and market shares in both meat and plant protein, proven innovation capabilities, a world-class supply chain and significantly reduced commodity exposure. The Maple Leaf Blueprint will continue to serve as the company’s strategic compass, as it focuses on driving growth in sustainable meats, expanding its reach in the U.S. market, and diversifying its portfolio of protein products.

“Today’s announcement is a pivotal next step in Maple Leaf Foods’ journey to becoming a globally admired, brand-led consumer packaged goods powerhouse,” said Frank. “Global demand for sustainably produced protein is expected to grow significantly, and we have built the right platform to unlock stakeholder value as we meet that demand. With our significant capital projects complete, we are harvesting the benefits of these investments, with margin expansion already underway and expected to continue. Now is the right time for this transaction, which positions Maple Leaf Foods for long-term success and brings us closer to our goal of being the most sustainable protein company on Earth.”

The new pork company – Unleashing a world-class business for growth

The new pork company will be unleashed to pursue its growth prospects as an independent company. The Maple Leaf pork business is already a leader in sustainably produced, premium quality, value-added pork products, is among North America’s largest producers of raised without antibiotics pork, and is a key supplier of RWA and conventional pork products to customers in Canada, the U.S. and internationally. The new pork company is well positioned to unlock the significant growth potential of its business by investing in both organic and inorganic opportunities, including increasing volumes, optimizing operations and efficiencies, and building on its industry-leading sales mix and margins.

The new pork company will also have an evergreen pork supply agreement with its anchor customer in North America, Maple Leaf Foods, and will leverage Maple Leaf Foods’ North American sales network through a brokerage arrangement.

“The new pork company will offer investors direct access to one of the world’s foremost, premium value-added pork producers with a clear vision to produce meat the right way while delivering industry-leading financial performance,” said Organ. “We are already setting the standard for best practices in sustainability, animal welfare, and high-quality pork production. 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.”

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