Below is the article from the Winnipeg free press.
Hylife Partners will be living the High life
Founding hog farmers sell their stake to Asian interests for half a billion dollars
By: Bill Redekop | Posted: 04/22/2019 7:00 PM |
A Manitoba success story started by four hog farmers has been sold for half a billion dollars to interests in Thailand.
HyLife Foods, founded a quarter century ago in southeastern Manitoba and headquartered in the town of La Broquerie, east of Steinbach, has been sold to Charoen Pokphand Foods (CP Foods).
CP Foods is the third largest pig production company in the world.
The sale is for 50.1 per cent of the company’s shares. ITOCHU of Japan owns the remaining 49.9 per cent from a previous transaction.
HyLife confirmed the sale price to CP Foods is for $498 million Cdn. HyLife has 2,500 employees, 2,000 of them in Manitoba.
HyLife was founded in 1994 by the three Vielfaure brothers (Paul, Denis and Claude) and Don Janzen. They built it into the largest pork exporter in Canada, including the purchase and expansion of the hog processing plant in Neepawa.
Claude and Denis, who are in their mid-to-late 50s, and Janzen, 68, continued to own the company, along with smaller shareholders, right until the sale, which is still subject to regulatory approval.
(BRANDON SUN FILES)
HyLife president Claude Vielfaure founded the company in 1994 with his brothers Paul and Denis and Don Janzen. Claude, Denis and Janzen continued to own the company right until the sale; all three are departing the company.
All three are departing the company. CEO Grant Lazaruk will succeed Claude as president, and the chief operating officer and chief financial officer will also remain.
“Good for them,” said Sylvain Charlebois, Dalhousie University food professor, about the company founders. “They’re Canadian boys. We need more of these success stories.”
Charlebois said its part of the globalization of agriculture. “This is the new normal. You either acquire or get acquired.”
Charlebois said people in Manitoba shouldn’t fear this deal.
“I think this is great news,” he said. “I suspect people in Winnipeg may feel this takeover is bad for the economy but I think it’s an opportunity. This global transaction can only make the gateway to Asia more clear and direct.”
I suspect people in Winnipeg may feel this takeover is bad for the economy but I think it’s an opportunity.”-Sylvain Charlebois, Dalhousie University food professor
Closer links to Asia, the largest pork consumers in the world, will benefit the industry in Manitoba. “That’s where the growth is. Let’s be honest here. The growth is not going to be in Canada,” he said.
Outgoing president Claude Vielfaure said the company was looking for a strategic investor when CP Foods came along. While HyLife had made many inroads into the Asian market on its own, CP Foods is just so much bigger with operations in 17 different countries around the world.
“(CP Foods) has always been interested in investing in pork production in North America because it diversifies them all over the world,” Vielfaure said. It will also expand the presence of CP Foods in the U.S.
CP Foods is a vertically integrated company involved in pork and poultry, aquaculture (fish and shrimp), animal feed and restaurant businesses. It’s a family business owned by Dhanin Chearavanont, reputed to be the wealthiest man in Thailand.
In 2016, CP Foods purchased U.S. frozen-food producer Bellisio Parent LLC for $1.3 billion CDN.
Vielfaure said the culture at the family-owned CP Foods is similar to the culture at HyLife, which in 2011 was given “platinum status” as one of Canada’s 50 best-managed companies.
Vielfaure said employees at HyLife, which is also involved in feed manufacturing and hog genetics, will see benefits. “(CP Foods) want our current team and current staff driving the business,” he said.
As far as producers, “it will open more doors for HyLife internationally.”
The Transpacific Partnership signed last year between Canada and five other countries, including Japan and Australia, helped the transaction. After all, Canada exports 70 per cent of its pork. “It wasn’t the deciding factor but it was a very complementary factor,” Vielfaure said. “When people invest in a company they look at where Canadian pork can be exported, so all trade agreements are important.”
Andrew Dickson, Manitoba Pork general manager, was saddened to learn HyLife will no longer be locally owned. However, the purchase should accelerate the company’s expansion and that will be good for hog producers, he said.
The Sale is recognition that Manitoba is a world class player in the market
“They have deep pockets that can weather storms better than most.” Andrew Dickenson, Manitoba Pork general manager
HyLife is based in Manitoba Canada. Genesus is based in Manitoba Canada. Until the last few years we were competitors in the Swine Genetic business; that was until Hylife sold Fast Genetics to Texas based investors. Prior to the sale we fought each other hard. Fast Genetics under HyLife ownership were formidable competitors.
We were glad when they sold to the U.S. based group. The sale was truly a present to Genesus.
We are happy for Claude and Denis Vielfaure, Don Janzen. After the sale of Fast we got to know them. Entrepreneurs like many of us they started small and grew their business to a major enterprise. They built a good team. They worked hard, had wins and losses but persevered on their mission.
Not sure what the total dollars they will end up with but as my father would say “They won’t have to worry about grocery money.” To sum it up “Good for them.”
CP we have done business with. They are a huge company with a major desire to keep growing. Poultry-Swine Feedmills are their core business. Over 800,000sows, a Global Mega Producer. They are the third largest producer in the world. We have been told by CP executives that their chairman’s mandated goal is to produce 60 million hogs a year within ten years. A challenge for sure but a reflection of their corporate drive. The investment in HyLife will add 3 million head per year plus towards the 60 million goal.
We understand that CP and Itochu already have a joint venture so they have had experience working together. HyLife has one of the most prominent names currently in the Japanese Pork Market.
We look at the CP purchase as a sign of confidence in Manitoba, Canada and North American Pork Industry. We expect the purchase is part of a strategy for CP to grow in the Canada-USA pork production base.
The Asian market is in flux with ASF in China – Viet Nam and it’s not hard to believe Asia will need to import Pork long term way beyond historical levels. CP just bought into the North American Supply chain and into a company with already a major presence in Asia.