Canada-based Maple Leaf Foods has entered into an agreement to sell Rothsay, its rendering and biodiesel business, to Darling International of Irving, Texas, for C645m ($614.11m).
This move is a part of the Maple Leaf Foods' plan to focus on its consumer packaged food business.
Rothsay is the leading rendering company in Canada and a leading producer of biodiesel. The company has six rendering facilities in Manitoba, Ontario, Quebec and Nova Scotia and a biodiesel facility in Quebec. It had EBITDA of approximately $85m in 2012.
Maple Leaf Foods president and CEO Michael McCain said that the sale of the sale of the rendering and biodiesel business supports the company's strategy to focus on effective capital deployment and profitable growth in the consumer packaged foods market.
"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," McCain added.
The transaction is expected to close by the end of 2013, subject to regulatory approvals, following which, the 550 employees of Rothsay will transition to Darling.
Maple Leaf plans to use the proceeds from the transaction to initially pay down debt. The management will then consider appropriate deployment of excess capital, including reinvesting in its core consumer packaged food businesses or returning excess capital to shareholders.
Maple Leaf plans to enter into a long term contract with Darling to receive by-products recycling services at competitive market rates.
Darling International is a leading and only publicly traded provider of rendering and bakery residuals recycling solutions to the US food industry. The company recycles beef, poultry and pork by-product streams into useable ingredients such as tallow, feed-grade fats, meat and bone meal, poultry meal and hides.
