Viterra Inc. is getting out of the North American livestock feed business.
The company announced Feb. 15 it has agreed to sell all of its North American livestock feed operations, which includes six feed mills and one premix manufacturing facility on the Prairies and six feed mills and a commodity blending site in the United States.
On the receiving end is Hi-Pro Feeds LP, a new entity formed by the feed business’s existing management team and Toronto’s Birch Hill Equity Partners.
Financial details of the agreement aren’t being disclosed.
“It’s a very fragmented, highly competitive industry and we felt that at this point that we have opportunities in what we would call more core areas of our business that provide a greater ability for us to hit what we’re trying to do, which is to be that leading influential market position,” said Karl Gerrand, Viterra’s chief operating officer for processing.
He said Viterra’s livestock feed operations represented $10 million last year in earnings before interest, taxes, depreciation and amortization compared to $114 million for its total processing business and $702 million for the whole company.
“So it’s certainly a small component of the overall contribution to our ends.”
Gerrand said the company received multiple bids.
According to a news release, operations at the facilities will continue as normal for staff and customers.
The move follows a “strategic review process” and doesn’t include Viterra’s New Zealand feed assets.
Gerrand identified oat, pasta, canola and malt processing as Viterra’s core areas of processing business. New investments, including a canola crushing plant in China and a malting facility in Australia, combined with larger shares of the market supply, make them areas of strength, he said.
“These are the areas where we’re investing, and this is where we feel fits our core values and what we’re trying to achieve,” said Gerrand.