Privately held Olymel, one of Canada's largest pork processors, has offered to buy Canada's second-largest hog producer out of receivership for $65.25 million.
Big Sky Farms, which produces about a million pigs per year and is based near Humboldt, Sask., entered receivership in early September after piling up $69 million in debt to secured creditors. Soaring feed costs left the company unable to pay its bills.
"It's a strategic possible acquisition for us," Richard Vigneault, spokesman for Ste. Hyacinthe, Que.-based Olymel, said Thursday.
Olymel owns nine pork packing and processing plants in Quebec, a bacon plant at Cornwall, Ont. and a primary hog slaughter plant at Red Deer, Alta., plus a number of poultry facilities, but does not currently raise hogs.
"Big Sky is already one of our suppliers and we want to secure our supplies," Vigneault said.
Other bidders can make offers for Big Sky until Nov. 9, followed by due diligence, an auction process that can include raised bids, and the receiver approving a winning offer in mid-January, according to court documents.
The sale process goes before a Saskatchewan court on Friday for approval.
If there are no other offers by Nov. 9, the sale with Olymel will close, according to Big Sky's receiver, Ernst + Young senior vice-president Kevin Brennan.
But Brennan expects more offers, with Toronto's Maple Leaf Foods and some U.S. meat companies expressing interest.
"I think we'll get fairly robust interest, given the scale and how efficient an operator Big Sky is," Brennan said.
A Maple Leaf spokesman could not be immediately reached.
A severe drought in the U.S. has decimated crops this year, which has led to higher costs for grains used to feed pigs. Rising feed costs have prompted some farmers to liquidate their herds, putting short-term pressure on hog prices and making losses worse for the remaining North American hog farmers.
Canada is the world's third-largest pork exporter.
Manitoba-based hog producer Puratone Corp. is also up for sale, after entering court protection from creditors last month.
-- Rod Nickel
writes for Reuters from Winnipeg.
Related stories:
Olymel won't rebuild burned Que. bacon plant,
Sept. 19, 2012
High feed costs push Big Sky into receivership,
Sept. 11, 2012
