Ridley Inc., a livestock feed company based in Winnipeg and Mankato, Minn., is officially on the market.
Ridley announced May 6 that it is seeking potential buyers for 69 percent of the company’s shares, owned by Ridley Corp. of Australia. Ridley also released that it has contacted interested parties but as of last week had received no offers.
Brian Hayward, Ridley’s board chair, said debt and a lawsuit related to BSE, led to the Australians’ decision to sell their stake in Ridley.
In February, Ridley paid $6 million to settle class action lawsuits related to the BSE crisis. The suits claimed that Ridley was the likely source of BSE contaminated feed, which infected an Alberta cow in 2003.
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The company maintained it had complied with all Canadian laws and regulations, but settled the lawsuit to refocus on business. Ridley is not entirely off the hook, because it will continue to pay legal expenses to the ongoing class action suit against the federal government. Ridley remains a participant in that case.
The legal action put a strain on Ridley’s operations, said Hayward, who joined the company in October 2007 and is better known as the former chief executive officer of Agricore United.
“What that essentially did… is froze the ability of Ridley Inc. to do anything,” said Hayward. “Who wants to put new money into a company that could be bankrupted by a lawsuit?”
Despite its legal problems, Ridley remains in good shape, Hayward said. He estimated that Ridley, which produces feed, supplements and vitamins at 41 plants, is one of the five largest feed companies in North America.
“It is incredibly strong from a balance sheet point of view,” said Hayward.
The company reported revenue of $167 million in its most recent quarter, up from $137 million in the same quarter in 2007.
Profit was also higher for the period ending March 31, with net earnings of $5.2 million after income taxes, compared to $3 million last year.
However, the liquidation of hogs and cattle in North America has affected Ridley’s operations. Sales volume in Canada was down nine percent in the recent quarter, from the same period in 2007.
The lower volumes are due, in part, to closures of Ridley premix plants in Lethbridge and Winnipeg.
Sales to the dairy and poultry sectors, along with an emphasis on the components of feed, have helped Ridley remain profitable.
“We focus on higher value-added products, like pre-mix supplements, and less on complete animal feeds,” said Steve VanRoekel, president and CEO of Ridley.
“For the long-term, markets correct themselves. And whether it’s Canada or the U.S., it’s the best place in the world to be in the meat, milk and egg production business. And the feed business,” he said.
