Darling International Makes Some Big Buys

By Tina Caparella

August was a busy month for Darling International, Inc. as it announced two acquisitions: Canadian renderer Rothsay and used cooking oil collection company Terra Renewal Services, Inc.

First, Darling has entered into a definitive agreement to acquire all the assets of Rothsay, a division of Maple Leaf Foods, Inc., for approximately $645 million (CAD) in cash. The transaction is expected to close by the end of 2013, subject to regulatory approvals.

Rothsay is the leading recycler of animal by-products in Canada and manufactures biodiesel for domestic and international markets. The company has a network of five rendering plants in Manitoba, Ontario, and Nova Scotia with a biodiesel operation in Quebec. Rothsay employs approximately 550 people and generated around $85 million (CAD) in earnings before interest, taxes, depreciation, and amortization over each of the past two fiscal years.

Maple Leaf plans to enter into a long-term contract with Darling to receive by-products recycling services at competitive market rates.

“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,” said Michael McCain, president and chief executive officer (CEO) of Maple Leaf Foods. “We are delighted to have concluded almost a year-long process with an agreement with Darling, the North American leader in food waste recycling. 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.”

“The combination of our two companies will create North America’s leading provider of independent rendering and recycling services,” commented Randall C. Stuewe, Darling International’s chairman and CEO. “The opportunity to add Rothsay to our North American platform is an exceptional honor. Rothsay is Canada’s premier recycler of animal by-products and a leading biodiesel manufacturer. We look forward to joining forces with Rothsay’s management team and employees and to the opportunity this brings our shareholders for future growth.”

Rothsay has over 60 years of experience in the rendering industry and has steadily grown over time to its current structure. According to a timeline on its website, Rothsay Hickson, formerly Oxford Deadstock, in Ontario was founded in 1947. In 1960, Rothsay’s Dundas, ON, facility was added followed by its Moorefield, ON, plant in 1962 and its facility in Montreal, QB, formerly Gordon Young Group, in 1965.

Four years later, Maple Leaf Mills purchased Rothsay’s Moorefield facility, and in 1980, Canada Packers bought Rothsay’s Dundas plant and Maple Leaf Mills purchased Gordon Young Group, bringing together Moorefield; Montreal; Foxtrap, NL; Winnipeg, MB; and Truro, NS.

In 1987, Hillsdown Holdings purchased Maple Leaf Mills and then bought Canada Packers in 1990, bringing the Dundas location back into the Rothsay family. Then in 1995, McCain Capital Corporation and the Ontario Teachers’ Pension Plan Board acquired controlling interest in Maple Leaf Foods, Inc. from Hillsdown Holdings, putting Rothsay under the Maple Leaf Foods flagship.

Rothsay ventured into the biodiesel industry in 2005 when it opened Canada’s first commercial-scale biodiesel operation in Montreal.

Maple Leaf Foods, Inc. is a leading food company headquartered in Toronto, ON, Canada. The company employs approximately 19,500 people at its operations across Canada and in the United States, the United Kingdom, and Asia. Maple Leaf had sales of $4.9 billion in 2012.

In late August, Darling completed its acquisition of Terra Renewal, 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 over 24 states.

“We are pleased to add Terra Renewal Services, Inc. and its employees to our company,” said Darling International’s Stuewe. “The grease collection business is highly complementary to our existing footprint while the industrial residuals business is a new line of business. We are truly excited about the opportunity the industrial residuals business brings us. Not only will we be able to provide additional services to our rendering raw material suppliers, but we have secured a supply chain that will be essential in building out our new waste stream extraction business.”

Darling International is the largest and only publicly traded provider of rendering and bakery residuals recycling solutions to the nation’s food industry. The company recycles beef, poultry, and pork by-product streams into useable ingredients such as tallow, feed-grade fats, meat and bone meal, poultry meal, and hides.

Darling also recovers and converts used cooking oil and commercial bakery residuals into valuable feed and fuel ingredients. In addition, the company provides grease trap collection services and sells used cooking oil collection equipment to restaurants.

October 2013 RENDER | back