XL Foods to acquire Tyson's Canadian beef business
June 26, 2008
by Keith Nunes
CALGARY — XL Foods, Inc., a subsidiary of the Nilsson Bros. Group, has signed a letter of intent to acquire Lakeside Farm Industries in Brooks Alberta, from Tyson Foods, Inc., Springdale, Ark. The C$107 million ($106 million) transaction includes C$57 million, which will be paid at the closing of the transaction, anticipated to be at the end of September. The additional C$50 million, plus interest, is scheduled to be paid over a five-year period.
The Lakeside business includes a cattle feeding operation, slaughtering and processing facilities, as well as retail fertilizer production and farming. Lakeside currently employs 2,300 and currently has the capacity to slaughter and process 4,700 cattle per day. The commodity boxed beef produced by the plant primarily is sold to customers in Canada and the United States.
"We believe the Lakeside plant and cattle feeding operation will complement our other beef operations in Alberta and Saskatchewan," said Brian Nilsson, co-chief executive officer of XL Foods Inc. and Nilsson Bros. Inc. "In addition, it will help strengthen our ability to meet the needs of our North American customer base."
IBP inc. acquired the Lakeside business in 1994. IBP later was acquired by Tyson Foods, and the acquisition transformed the former chicken processor into the largest protein processor in the world.
"Lakeside is one of the premier beef processing operations in Canada and has operated successfully for many years," said Richard L. Bond, president and c.e.o. of Tyson Foods. "However, Lakeside no longer fits the long-term strategy of our company, as our current international strategy is focused primarily in Asia, Mexico and South America."