The Irving family’s potato processing business is poised to expand its Canadian reach from the Atlantic over to the spud-growing regions of southern Alberta.
Cavendish Farms, a Moncton-based subsidiary of J.D. Irving Ltd., announced late Monday it’s agreed to buy the frozen potato business of Maple Leaf Foods, which includes a processing plant at Lethbridge, Alta., in a deal valued at about $60 million including inventory and working capital.
The Maple Leaf Potatoes plant, HACCP-certified since 2001, employs about 135 people making French fries, hash browns and other frozen products for the domestic, U.S. and overseas markets, booking total sales of about $75 million per year.
The deal, expected to close by the end of this month, "will result in a more competitive Cavendish with stronger capabilities to service our customers from coast to coast in North America," Cavendish president and Irving co-CEO Robert Irving said in a release.
"It enhances our national distribution network in the foodservice and retail sectors in Canada and builds on our strong position in the United States."
Cavendish described the Lethbridge plant — known as York Farms until its owner, Canada Packers, merged into Maple Leaf Foods in 1991 — as "strategically located in close proximity to southern Alberta’s prime agricultural region, renowned for its high yields of quality potatoes ideal for French fry production."
Irving said he looks forward to meeting with potato growers, suppliers and "local stakeholders" in the Lethbridge operation.
Cavendish also said it expects to retain all employees now working at the Lethbridge plant "in addition to international employees."
The company also said it will continue to make and market all of Maple Leaf Potatoes’ product offerings in the "near term," and "will seek to retain all existing customer relationships."
Irving added he "personally want(s) to assure existing customers of our commitment to uninterrupted supply, quality products and service, and, to ensuring a seamless and efficient transition to Cavendish Farms."
For its part, Maple Leaf said it plans to use the proceeds from this deal to pay down debt.
Maple Leaf Potatoes, which had operated as part of the Toronto company’s consumer foods business, "will be in good hands in a company that is focused on growth in the value-added potato business," Maple Leaf CEO Michael McCain said in a separate release.
The Irvings entered the frozen potato business in 1980 by buying Prince Edward Island vegetable and potato processor C.M. McLean. The operation, then renamed Cavendish, shifted away from frozen vegetables and fruit during the late 1980s to focus on the potato business.
Cavendish now operates two potato plants east of Summerside, P.E.I., more recently adding a biogas facility to produce energy from its potato waste.
Cavendish became North America’s fourth-largest potato processor in 2001 when it bought a third potato plant at Jamestown in eastern North Dakota. It also expanded into appetizers in 2009 by buying Omstead Foods’ processing plant at Wheatley, Ont., about 50 km east of Windsor.
Potato processor Cavendish buys appetizer business, July 29, 2009
P.E.I. potato plant brings biogas facility online, June 20, 2009