Sofina Foods Inc. is buying Edmonton-based poultry processor Lilydale Inc. for $130 million.
Lilydale, with facilities in Abbotsford and Port Coquitlam, B.C., Edmonton and Calgary, Alta. and Wynyard, Sask., will become a wholly owned subsidiary of Sofina, which is based in Markham, Ont.
The proposed transaction would be completed by way of a court approved plan of arrangement in which Lilydale’s shareholders would exchange their shares for $10 per share in cash and about $5.43 per share in debentures for aggregate consideration of $75 million representing a significant premium over the historical book value of the shares.
Including the debt of Lilydale, which will remain outstanding at close, the total enterprise value of Lilydale will exceed $130 million.
Lilydale’s shareholders will vote on the arrangement at a shareholder meeting to be held on or about April 6. Subject to Lilydale shareholder approval and applicable regulatory approvals, the transaction is expected to close in April 2010.
Lilydale was established in 1940 as Alberta Poultry Producers Ltd. It moved from a co-operative to a corporate structure in 2005.
“Over the past several years, Lilydale has been approached by a number of different companies regarding potential transactions; however, the company did not feel that any of those potential suitors were the right fit until now,” said Don Sundgaard, Lilydale’s board chair person in a news release.
“In our view, the consideration to be paid and the terms of the arrangement are fair and appropriate and should be seen as very attractive to all Lilydale stakeholders, from its shareholders through to its customers.”
Lilydale’s brands include Lilydale, Tailgate, Daystarters, Country Fair, Roast & Boast and ZamZam.
Privately owned Sofina Foods manufactures and distributes processed pork, beef and poultry products for retail and food service customers in Canada, the United States and Japan. Sofina’s portfolio includes the Fletcher’s, Cuddy, Quality Meats and Vienna brands in addition to a private label business.
The combination of Sofina and Lilydale will create a company with combined sales revenue exceeding $800 million and a workforce of more than 3,300 employees.
The companies said the businesses are complementary with Lilydale’s strengths in Western Canada and primary processing of poultry being combined with Sofina’s strengths in Eastern Canada and further processed products of beef, pork and poultry.
If the transaction proceeds, Sofina has committed to invest a further $20 million over the next two years into Lilydale for operations and facility improvements.
