Vancouver, Canada-based SunOpta Inc, a leading Canadian specialty, non-GMO and organic food manufacturer, announced late February it has divested its specialty and organic soy and corn business to Pipeline Foods, LLC (“Pipeline Foods”) for C$66.5 million ($50.3m), the third divestment that SunOpta has made since 2017 when it sold its flexible re-sealable pouch products and nutrition bar operations.
SunOpta will continue to operate its other North American-based sourcing and supply operations, consisting of sunflower and roasting operations, as well as its European-based international sourcing and supply platform, Tradin Organic, which were not part of the sale.
SunOpta also announced 26 February its fourth quarter 2018 sales results and the termination of David J. Colo as President and CEO, who held the position for 12 months, and the appointment of director Katrina (Kathy) Houde as interim CEO.
The New York and Toronto-listed company said the transaction closed on February 22, 2019 and is subject to certain post-closing adjustments. The business formed part of SunOpta's North American-based raw material sourcing and supply segment and includes five facilities.
In 2018, the soy and corn business contributed US$104.4 million of external revenue, US$8.3 million of gross profit (including $0.8 million of depreciation), and US$6.8 million of earnings before income taxes.
“Our specialty and organic soy and corn business has a long history of supplying high quality specialty, non-GMO and organic ingredients to the food industry,” said John Ruelle, senior vice president of Raw Material Sourcing and Supply at SunOpta. “I want to thank all of our employees who are transitioning to Pipeline Foods for their hard work and dedication. Each employee has had a meaningful impact and contributed to the Company’s Value Creation Plan during their time at SunOpta. We believe Pipeline Foods is well positioned in this space, which should serve the industry well and be positive for our transitioning employees.”
Eric Jackson, chief executive of Pipeline Foods said the company was excited by this incredible opportunity to grow its business and expand the accessibility of organic and specialty grains in the US. “With this move, we are merging the newest team in the sustainable agriculture supply chain business with the most tenured and respected team in the business and creating something even better," he said. "With a focused passion, we seek to merge the best parts of each organization’s culture, practices, experience, and relationships to build a world-class business that can deliver value to our farmer-partners as well as our customers.”
"We are pleased with the overall valuation of the transaction, which is a testament to the exceptional specialty, non-GMO and organic food and feed business we have built over the last 20 years. This decision allows us to reduce debt and redeploy capital to further enhance our growing consumer products and international organic sourcing platforms," said Kathy Houde, SunOpta's interim CEO.
“We accelerated revenue growth during the fourth quarter, with revenue increasing 9.6 percent and adjusted revenue increasing 16.0 percent over the fourth quarter of the prior year. We generated double-digit revenue growth in both our Consumer Products and Global Ingredient segments, reflecting the impacts of our enhanced go-to-market efforts in key product categories and strengthened customer relationships.
"Our sales opportunity pipeline remains robust and we are progressing on plan with capital investment projects to both expand capacity and improve margins in key areas of our portfolio."
SunOpta's Hope, Minnesota facility is the first food manufacturing facility in the United States to receive U.S. Department of Agriculture (USDA) Process Verified Program (PVP) verification for Non-Genetically Modified Organisms (GMO)/Non-Genetically Engineered (GE) products.
USDA granted approval for SunOpta's Hope facility to produce PVP verified Non-GE/GMO food-grade soybeans and corn. SunOpta's soybeans and corn were the first produced in the United States to have the full auditing and verification of the USDA.