Maple Leaf Jumps After Agreeing to Rendering Sale
Maple Leaf Foods Inc. (MFI), the Canadian food processor, rose the most in almost five years after the company agreed to sell its animal-rendering business to Darling International Inc. (DAR) for about C$645 million ($613 million).
Maple Leaf climbed 7.8 percent to C$14.44 in Toronto, the biggest gain since October 2008.
Maple Leaf will use the sale proceeds to pay down debt, and may use additional excess cash to reinvest in its packaged food business or return capital to shareholders in the future, the Toronto-based company said in a statement today. The Rothsay rendering and biodiesel business had earnings before interest, taxes, depreciation and amortization of about $85 million in 2012, according to the statement.
Darling will fund the transaction through new debt financing, the Irving, Texas-based company said in a separate statement.
The sale, which is expected to close by year-end, is Maple Leaf’s third disposal announced this quarter, after the company agreed to sell its commercial turkey farms and hatchery operations to Ernald Enterprises Ltd. and Cuddy Farms Ltd. respectively, for undisclosed sums.
Maple Leaf is in the midst of a five-year overhaul, which began in 2010, that includes closing eight plants and cutting 1,550 jobs by 2014.
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