Winnipeg foodservice egg processor MFI Food Canada is poised to become an arm of breakfast giant Post as part of the U.S. company’s biggest-ever takeover deal.
Post Holdings, whose brands include cereals such as Honeycomb, Alpha-Bits, Grape-Nuts and (in Canada) Shreddies, plus other cereal, snack and nutrition supplement products, announced Thursday it has an agreement in place to buy Minnetonka, Minn.-based egg, potato and cheese processor Michael Foods for $2.45 billion (all figures US$).
Among Michael’s assets is its MFI Food Canada subsidiary — billed as “the premier foodservice provider of processed eggs north of the border,” including liquid whole eggs, egg whites, egg yolks, scrambled mix, hard cooked and peeled eggs, cooked omelettes and egg patties — and MFI’s 33,000-square-foot processing plant in Winnipeg.
Formed in 1987 combining food processing companies whose histories date back as far as 1908, Michael Foods today is owned by an investor group including, among others, the company’s managers and subsidiaries of investment firms GS Capital Partners and Thomas H. Lee Partners. Its brands include Papetti’s, Better ‘n Eggs, Easy Egg, Crystal Farms, All Whites, Simply Potatoes and Abbotsford Farms.
Michael bills itself as the No. 1 producer and processor of value-added eggs in the foodservice, food ingredient and retail sectors, the No. 1 producer and processor of refrigerated potato products in foodservice and retail, and the upper U.S. Midwest’s No. 1 producer of natural and processed branded cheese.
The company entered the Canadian egg business in 1999, when it formed a joint venture, Trilogy Egg Products, with Inovatech Egg Products and Manitoba Egg Producers to build a manufacturing plant in Winnipeg.
Michael took over the Canadian egg products division of Inovatech Inc. in 2002 — and then took over Trilogy in 2009, making it a fully-owned brand of what’s now MFI Food Canada. Michael has since rebranded the Trilogy product line under its own Papetti’s brand.
On top of its Winnipeg business, Michael runs eight other egg processing plants, five egg farms and three primary egg product distribution centres in Minnesota, Nebraska, Iowa, New Jersey and Pennsylvania; two potato processing plants, in Minnesota and Nevada; and a cheese processing plant and four cheese distribution centres in Minnesota and Wisconsin.
“We believe our business will benefit from Post’s portfolio management approach and from our continued focus on the breakfast daypart, expanding egg consumption to all dayparts, and delivering convenient meal and snack choices to consumers,” Michael Foods CEO Jim Dwyer said in a release.
St. Louis-based Post Holdings described the pending deal as its “largest transaction to date” and said it “continues Post’s strategy of investing in large secular themes in the food industry.” Reuters, citing unnamed sources, reported Thursday that Post outbid U.S. meat packing firm Tyson Foods to make this deal.
Post said Thursday it “remains focused on diversifying its business to capitalize on shifts in consumer behaviour towards increased consumption of protein and away-from-home breakfast occasions.”
Post added it expects to recognize about $10 million in “synergies resulting from benefits of scale,” though Michael Foods will operate independently under its current management team, including Dwyer.
Michael in fiscal 2013 booked net earnings of $50.4 million on net sales of $1.95 billion, up from $30.1 million on $1.86 billion in 2012. Michael’s 2013 earnings before interest, taxes, depreciation and amortization (EBITDA) were pegged at $257.8 million, up from $242.8 million in 2012.
Post said Thursday it expects adjusted full-year EBITDA for Michael in 2014 to run between $255 million and $270 million.
The companies said Thursday they expect to complete their deal in the second calendar quarter of 2014, pending “various closing conditions” including expiration of waiting periods under U.S. antitrust laws. –– AGCanada.com Network