Masterfeeds, one of Canada’s biggest feed and animal food processors, is poised to merge into a new joint venture alongside one of its owner’s other subsidiaries and the feed operations of U.S. agribusiness ADM.
Alltech, the U.S.-based firm that has wholly owned Masterfeeds since 2015, announced Tuesday it will merge Masterfeeds’ 15 Canadian feed mills into a new North American animal feed business that also includes Alltech’s Hubbard Feeds and its 18 U.S. mills, plus ADM’s 11 U.S. mills.
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“We’re evolving with purpose to offer an industry-leading range of products and solutions for livestock, equine, backyard and leisure animals,” Alltech and ADM said in a joint statement Tuesday.
The two companies expect to close the deal and formally launch the as-yet-unnamed joint venture sometime in the first quarter of the new year. No financial details were released Tuesday.
Alltech will be the majority owner of the new firm, which they said will be “governed by a board with equal representation from each parent company.”
The deal will not include any of ADM’s Canadian locations, nor its U.S. premix and additive businesses. The Reuters news service reported Tuesday the deal will also not include ADM’s mills in Mexico.
Nor will the deal include Alltech’s Ridley block and feed ingredient businesses or specialty ingredients business. All those business units, however, are expected to serve as suppliers to the joint venture.
Masterfeeds began in 1929 as Master Feeds, the commercial feed division of Toronto Elevators Ltd., which merged into Maple Leaf Mills in 1961. U.S. ag co-operative Ag Processing Inc. (AGP) took over Masterfeeds in a joint venture with ADM in 1991, then bought full control in 2001.
Alltech became a minority partner in Masterfeeds in 2015 when it bought control of feed firm Ridley Inc., then bought full control of Masterfeeds later that year.
Masterfeeds, headquartered at London, Ont., with a regional office in Winnipeg, also holds feed analysis firm Stratford Agri Analysis and the feed and tack retail chain Cowtown, which has four stores in Saskatchewan and one at Brandon, Man. Alltech hasn’t yet said whether those businesses go into the new joint venture.
The companies also didn’t say Tuesday whether the combination will involve any job cuts or site closures, but said the new j.v. “will offer an opportunity to align their complementary North American feed strengths, including the expertise of their teams, extensive manufacturing capabilities, deep experience in nutrition science, and well-recognized and respected existing product portfolios.”
The new business, they said, “is going to be able to offer even more: broader capabilities, more products, and new innovative solutions, all delivered with the relationships and service our customers have come to expect.”
Reuters, in its report Tuesday, noted ADM has been in cost-cutting mode since early this year and its nutrition business has fallen short of revenue targets.
“ADM has historically grown its animal feed business through acquisition, but the returns have not worked out so far,” Morningstar analyst Seth Goldstein told Reuters. “It makes sense for ADM to look for these kind of partnerships that could add value to its business.”
