Maple Leaf Foods, one of Canada’s largest food companies, plans to spin off its pork division. The move will create two public companies, each “with a sharper focus to execute its own growth strategy and pursue its uncompromising commitment to best-in-class sustainability practices,” according to the announcement.
“This transaction is the start of a new era to unlock the full potential of two outstanding businesses, each with a distinct value proposition and growth opportunities,” Curtis Frank, president and CEO of Maple Leaf Foods, said in a press release.
“As separate companies, Maple Leaf Foods and the new Pork Company will each have exciting prospects, a sharpened execution focus with its own dedicated management team, and the financial independence to pursue its own value creation strategy, all with an uncompromising commitment to safety and sustainability,” Frank said.
Dennis Organ, the incoming CEO of the new company, will lead its management team. He joined Maple Leaf Foods in February 2023 as president, pork complex. Organ has more than 27 years of experience in the food industry, including 11 years with Smithfield Foods, where he held senior leadership roles, including chief operating officer and chief executive officer.
The new company’s name will be announced in the coming months. Maple Leaf Foods will retain 19.9% ownership in the new pork entity, according to the release.
The two companies will enter into an evergreen pork supply agreement. Under this agreement, the new company will provide Maple Leaf Foods with pork at market prices, which will give the new company a strong anchor customer.
In turn, Maple Leaf will provide the new entity with brokerage services in North America.
The separation has been approved by Maple Leaf’s board of directors and is expected to be completed in 2025.
Global pork production has begun to stabilize as the industry sees profit. Rabobank’s quarterly report for the second quarter of 2024 indicated a shift in the industry as sow herd numbers began to plateau after a period of decline. Better-than-expected consumer numbers and reduced production costs across most regions contributed to the positive outlook.