October 20, 2012
Canadian pork processors express interest in acquiring Big Sky Farms
After soaring feed costs left the company unable to pay its bills, Big Sky farms is looking for new ownership as two Canadian pork processors expressed interest.
Big Sky, which produces about one million pigs per year and is based near Humboldt, Saskatchewan, entered receivership in early September. Manitoba-based hog producer Puratone Corporation is also up for sale, after entering court protection from creditors last month.
Both Toronto-based Maple Leaf Foods and Quebec-based Olymel L.P. are sizing up Big Sky, said Kevin Brennan, senior vice-president at Ernst & Young, the receiver for Big Sky. Big Sky is already a supplier to those companies'' hog plants. Some packers outside Canada are also interested, he said.
"There''s a great deal of interest in terms of buying Big Sky," said Brennan, adding that Big Skyis for sale as a whole, not in pieces.
"They take a long-term view of the industry itself, and if there''s a concentration of producers going out of business it provides opportunity for others to grow."
Maple Leaf spokesman Dave Bauer said it''s premature to comment on any specific opportunities the company may have.
"We are evaluating several options that would secure our longer term hog supply," he said.
A severe drought in the US 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.
Ernst & Young will ask a court next week to approve a sales process for Big Sky. Saskatchewan Agriculture Minister Lyle Stewart said Big Sky should be an attractive acquisition for "major operators" in Canada looking to expand.
"I would expect it to be sold off more or less in one piece. It''s too valuable an asset" to shut down, he said.
Despite the hog industry''s problems, there are parties interested in buying Puratoneas a whole, said court-appointed monitor Brent Warga of Deloitte.
Two parties filed expressions of interest with the monitor in buying all or most of the company, and a third group has also expressed interest. All were rejected, but the parties were invited to make new offers by mid-October, with the intent of a sale by October 22, according to court documents.
Both Big Sky and Puratone continue to feed pigs and pay staff as usual, and have not liquidated their herds.
Canada is the world''s third-largest pork exporter and the biggest live hog exporter.