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Maple Leaf Foods Inc. (TSX:MFI:CA) (OTCPK:MLFNF) announced on Tuesday a plan to unlock significant value by separating into two independent public companies, each primed for growth and positioned to be a leader in its field.
Looking ahead, Maple Leaf Foods (OTCPK:MLFNF) will continue to pursue its vision to be the most sustainable protein company on Earth, now as a more focused, brand-led consumer packaged goods company that will meet the world’s growing need for sustainably produced protein.
The plan included spinning off the pork business to a new company, the name of which will be announced in the coming months. Maple Leaf Foods (OTCPK:MLFNF) expects to unlock significant growth potential by unleashing a “world-leading organization” which produces sustainable meat the right way and can fully take advantage of its own unique business model to unlock its own significant growth potential.
Maple Leaf Foods (OTCPK:MLFNF) will retain a 19.9% ownership position in the new pork company, and the two companies will enter into an evergreen pork supply agreement, which is anticipated to deliver value for both businesses. The separation will also allow both entities to pursue their individual value creation opportunities. Under the terms of the agreement, the new pork company will continue to provide Maple Leaf Foods with a secure supply of high-quality, sustainable pork at market prices, to meet the needs of its prepared foods business. That setup is seen as providing the new pork company a strong anchor customer. Maple Leaf Foods (MMLFNF) will in turn provide the new Pork company with brokerage services in North America, as well as certain other services.
The business separation has been approved by the board of directors of Maple Leaf Foods (OTCPK:MLFNF) on the recommendation of a special board committee.
“This transaction is the start of a new era to unlock the full potential of two outstanding businesses, each with a distinct value proposition and growth opportunities,” stated Maple Leaf Foods CEO Curtis Frank. “As separate companies, Maple Leaf Foods and the new pork company will each have exciting prospects, a sharpened execution focus with its own dedicated management team, and the financial independence to pursue its own value creation strategy, all with an uncompromising commitment to safety and sustainability,” he added.