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Genus to acquire Genetiporc

Genus to acquire Genetiporc
Genus will acquire Genetiporc for $40m and integrate company with its PIC swine genetics business.

GENUS PLC, a leading global animal genetics company, announced Sept. 23 the acquisition of Genetiporc, the porcine genetics business of Aliments Breton Foods Group.

Genetiporc is based in Canada and has operations in the U.S. and Mexico as well as a joint venture in Brazil. The total consideration for the acquisition, including assumed debt and Genus' 49% share of the Brazilian joint venture, is £24.8 million (about $39.7 million), the announcement said.

Genus said it will acquire the U.S. and Mexican Genetiporc companies and certain assets in Canada, principally intellectual property, genetic nucleus herds of approximately 3,200 pure-line sows and customer contracts.

The consideration for these acquisitions is $30.0 million in cash, which will be financed from existing facilities. These acquisitions also include assumption of $5.6 million in debt, which will be repaid at or shortly after closing.

The closing is subject to, among other things, satisfactory completion of veterinary verification and is expected to occur in October.

Aliments Breton Foods, a large North American producer and processor of organic and natural pork, will become a customer of PIC — the porcine global business unit of Genus — as part of a long-term agreement to buy exclusively PIC genetics.

Agroceres PIC, Genus' joint venture in Brazil, has signed a memorandum of understanding with the shareholders of Genetiporc do Brazil to acquire it for 18.5 million real ($8.3 million), subject to various conditions and completion of confirmatory due diligence. The acquisition of Genetiporc do Brazil by Agroceres PIC will be funded by Genus and joint venture partner Agroceres.

"The acquisition of Genetiporc represents a further important step in the strategic growth and development of Genus as we focus on providing the very best genetics to meet the demands of a rapidly growing and urbanized global population," Genus chief executive Karim Bitar said.

According to the announcement, in the fiscal year ended June 30, Genetiporc had more than 300 customers and estimated volumes of more than 13 million market pig equivalents, while Genus had 99 million market pig equivalents in the same period.

The acquisition is expected to be modestly accretive to Genus' earnings in fiscal 2014 and will add more significantly to earnings as synergies are realized over the first 24 months, the company said.

At the full-run rate, synergies of $11 million per year are anticipated (including Genus' share of synergies in Brazil) as the Genetiporc operations are combined with PIC, Genus said.

Genus explained that Genetiporc "represents an excellent strategic fit with Genus' core activities and has very similar values" to the PIC business.

Genetiporc, established in 1984, has built a strong reputation across the Americas for porcine genetics, with a particular emphasis on meat quality, product development, biosecurity and health, all of which are also areas of focus for Genus.

Genetiporc's complementary product portfolio expands PIC's genetic diversity and supports future global product development, Genus noted, adding that the genetic nucleus herds and product development programs of the two businesses will be integrated.

Genus has worldwide sales of semen and breeding animals in 70 countries under the ABS (dairy and beef cattle) and PIC (swine) trademarks. With headquarters in Basingstoke, U.K., and research laboratories in Madison, Wis., Genus companies operate in 30 countries.

Volume:85 Issue:40

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