Maple Leaf Foods Inc. (MFI), the Canadian producer of foods ranging from Black Forest ham to bagels, has put its animal-rendering business up for sale, according to two people with knowledge of the matter.
Maple Leaf hired investment bank RBC Capital Markets to sell Rothsay Rendering, which recycles inedible animal parts into feed and fuel, said the people, who asked not to be identified because the talks are confidential. The unit is valued at as much as C$250 million ($243 million), they said.
Rothsay is part of Toronto-based Maple Leaf’s agribusiness division, which reported adjusted operating earnings of C$68.4 million in 2012, a 16.4 percent decline from a year earlier. The company attributed the fall to an increase in operating costs, including raw materials.
Maple Leaf this week announced the sale of its commercial turkey farms and hatchery operations to Canada-based Ernald Enterprises Ltd. and Cuddy Farms Ltd., respectively, for undisclosed sums.
Maple Leaf’s shares have risen 27 percent this year, giving the firm a market value of C$2.1 billion. Last month, Michael Palmer, an analyst at Veritas Investment Research in Toronto, said in an interview with Bloomberg News that the company would be an attractive acquisition for Austin, Minnesota-based Hormel Foods Corp. (HRL), maker of Spam lunch meat.
A Maple Leaf spokesman declined to comment on a Rothsay sale as did a spokeswoman for RBC, the investment-banking unit of Royal Bank of Canada.
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