Spring is usually marked by the arrival of robins.
But for Saskatchewan Wheat Pool, this spring is being marked by the departure of Robin’s Donuts from its flock of companies.
The pool announced last week that it was ending its foray into the world of store-front retailing by selling its 35 percent share in Robin’s Foods Inc.
It said the sale should allow the pool to increase market share for bakery products manufactured by its CSP Foods division.
“By not being an owner of one of the competing street-front businesses, this is strategically a very good move in expanding our ability to get into supply agreements and marketing arrangements with a whole host of bakery-oriented enterprises,” said Richard Klassen, executive vice-president of the pool’s food and industrial group.
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Under the terms of the deal, Afton Food Group Ltd. of Burlington, Ont., will pay $19 million to buy all outstanding shares in Robin’s Food Inc., which operates a chain of 244 Robin’s Donuts franchises across Canada.
The pool owns 35 percent of the shares of Robin’s and so will receive about $6.7 million from the sale. The rest will go to the majority shareholder, a company based in Thunder Bay, Ont.
But while the deal will inject welcome cash into the pool’s coffers, Klassen said that was not the main reason for the sale.
“We saw this as an opportunity to receive good value for Robin’s,” said Klassen, adding the pool has been looking to divest itself of the retailer for some time.
“But it was primarily driven by our desire to expand into other markets with our bakery products.”
CSP has developed expertise in producing high-quality bakery ingredients, including flour, mixes, fillers and toppings, he said.
The pool invested in Robin’s in 1988 and in the intervening years often pointed to the ubiquitous doughnut shops as an example of the widely diversified nature of the company’s business.
Klassen said the decision to sell doesn’t mean the original decision to invest in Robin’s was wrong or that the company is backing away from diversification.
And while the pool never released profit and loss figures for Robin’s, he said it had been a good investment.
The deal still requires certain regulatory and other approvals. The pool expects the deal will be closed on or about March 31.
