Darling acquires assets of Rothsay

Darling acquires assets of Rothsay

Rendering company Darling buys Canadian animal byproduct recycler Rothsay.

DARLING International Inc., a provider of rendering, recycling and recovery solutions to the nation's food industry, announced Aug. 23 that it has entered into a definitive agreement to acquire all of the assets of Rothsay, a division of Maple Leaf Foods Inc., for approximately $645 million (Canadian) in cash.

Rothsay is a leading recycler of animal byproducts in Canada and provides an essential service for the efficient and environmentally responsible collecting, processing and recapturing of edible and inedible byproducts.

Rothsay processes raw materials into finished products of fats and proteins that are sold in domestic and international markets, including the U.S., Europe, Mexico and South America. Rothsay also manufactures biodiesel for domestic and international markets.

Rothsay has a network of five rendering plants in Manitoba, Ontario and Nova Scotia and a biodiesel operation in Quebec. Rothsay employs approximately 550 people and generated $85.0 million (Canadian) of earnings over each of the past two fiscal years, Darling said in an announcement.

"The combination of our two companies will create North America's leading provider of independent rendering and recycling services. ... Rothsay is Canada's premier recycler of animal byproducts and a leading biodiesel manufacturer," Darling chairman and chief executive officer Randall C. Stuewe said.

Darling said it expects to finance the transaction through a combination of borrowings under a new senior secured revolving credit facility and term A bank loan facility, which will be entered into in connection with the closing of the transaction.

The transaction is subject to customary closing conditions, including Canadian Competition Bureau review.

On a conference call, Stuewe said the acquisition allows Darling to transfer best practices, improve operational efficiencies, leverage its stake in the Diamond Green Diesel venture with Valero Energy and add value-added products to the Rothsay portfolio — similar to what Darling did when it acquired Griffin Industries a few years ago.

Stuewe added that Rothsay will operate "autonomously" following a slow integration period like Griffin's.

"The sale of our rendering and biodiesel business supports our strategy to focus on effective capital deployment and profitable growth in the consumer packaged foods market," Maple Leaf president and CEO Michael McCain said. "The sale will support future investments in our consumer facing businesses and allow Darling to build on Rothsay's strong capabilities and deep customer relationships."

In its announcement, Maple Leaf explained that proceeds from the transaction of approximately $645 million will initially be used to pay down debt. Upon completion of the prepared meats strategy, management will consider the appropriate deployment of excess capital, including reinvesting in its core consumer packaged food businesses or returning excess capital to shareholders.

Maple Leaf added that it plans to enter into a long-term contract with Darling to receive byproduct recycling services at competitive market rates.


Terra acquisition

Darling announced Aug. 26 that it completed its acquisition of Terra Renewal Services Inc., a provider of essential environmental services focused on the collection, hauling, reprocessing and recycling of waste cooking oil and disposal of non-hazardous, liquid and semi-solid waste streams from the food processing industry with operations in more than 24 states. The transaction was first announced Aug. 6.

The purchase price for the transaction was approximately $120 million in cash, and Terra has earnings of approximately $22.0 million per year.

Stuewe said, "Adding Terra Renewal Services Inc. and its employees to the Darling family is a natural fit. The grease collection business will transition smoothly into our existing footprint, and the industrial residuals business adds a new line of service for our rendering raw material suppliers."

Darling is the largest and only publicly traded provider of rendering and bakery residuals recycling solutions to the nation's food industry. It recycles beef, poultry and pork byproduct streams into useable ingredients such as tallow, feed-grade fats, meat and bone meal, poultry meal and hides. The company also recovers and converts used cooking oil and commercial bakery residuals into valuable feed and fuel ingredients.

In its most recent financial statement, Darling reported net income of $26.4 million for the second quarter ended June 29. It reported net sales of $423.6 million in the quarter, compared to $437.7 million a year ago, due primarily to lower finished product prices for fats.

For the first half, Darling had net sales of $869.0 million, compared to $823.8 million for the comparable 2012 period.

Volume:85 Issue:35

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.