SunOpta divests organic soy and corn business, reveals leadership change
28 Feb 2019 --- SunOpta Inc. has sold its specialty and organic soy and corn business to Pipeline Foods, LLC for US$66.5 million, subject to post-closing adjustments. The transaction closed on February 22, 2019. In the same week, the company announced the termination of David J. Colo’s role as President and CEO.
“Our specialty and organic soy and corn business has a long history of supplying high-quality specialty, non-GMO and organic ingredients to the food industry,” says John Ruelle, Senior Vice President of Raw Material Sourcing and Supply at SunOpta. “We believe Pipeline Foods is well positioned in this space, which should serve the industry well and be positive for our transitioning employees.”
“We are excited by this incredible opportunity to grow our business and expand the accessibility of organic and specialty grains in the US,” notes Eric Jackson, Chief Executive of Pipeline Foods. “With this move, we are merging the newest team in the sustainable agriculture supply chain business with the most tenured and respected team in the business, and creating something even better.”
With a focus for passion, Pipeline Foods seeks to merge the best parts of each organization’s culture, practices, experience, and relationships to build a business that can deliver value to their farmer-partners as well as our customers, says Jackson.
SunOpta's specialty and organic soy and corn business formed part of its North American-based raw material sourcing and supply segment and includes five facilities located in Hope, Blooming Prairie, Ellendale, Moorhead, all in Minnesota, and Cresco, in Iowa. As part of the deal, SunOpta and Pipeline Foods have entered into a multi-year supply agreement for certain ingredients used in SunOpta’s consumer products business.
SunOpta will continue to operate its other North American-based sourcing and supply operations, consisting of sunflower and roasting operations, as well as its European-based international sourcing and supply platform, known as Tradin Organic, which were not part of the sale, says the company.
In the same week, SunOpta announced that David Colo will no longer be President and CEO. Current SunOpta Director Katrina Houde, a SunOpta director since 2000, will serve as the Interim CEO to facilitate an orderly transition, according to the company.
“On behalf of the Board of Directors, I would like to thank David for his contributions to SunOpta and wish him well in his future endeavors,” says Dean Hollis, Chairman of the Board of Directors.
“Over the last two years, the foundation of the company has been strengthened, and SunOpta is now through the first phase of the Value Creation Plan. The Board is moving quickly to identify the next CEO who will accelerate our efforts to drive long-term, sustainable, shareholder value through the Value Creation Plan. In the interim, I am confident that our talented senior leadership team will continue to execute on our key strategic objectives,” Hollis notes.
SunOpta also released its results for 2018 this week. Revenues for the fourth quarter were US$320.5 million, an increase of 9.6 percent compared to $292.4 million in the fourth quarter of 2017. Excluding the impact on revenues for the fourth quarter of 2018 of changes in commodity-related pricing, foreign exchange rates and the impact of discontinued flexible resealable pouch and nutrition bar products, revenues in the fourth quarter of 2018 increased by 16.0 percent compared with the fourth quarter of 2017.
The Global Ingredients segment generated revenues from external customers of $139.9 million, an increase of 10.3 percent compared to $126.9 million in the fourth quarter of 2017. Excluding the impact on revenues of changes in commodity-related pricing and foreign exchange rates, Global Ingredients revenue in the fourth quarter increased 15.5 percent. Excluding the effect of commodity prices and foreign exchange, sales of internationally-sourced organic ingredients grew 17.1 percent during the quarter, mainly driven by increased demand for cocoa, fruits, oils and coffee and sales of domestically-sourced ingredients grew 11.3 percent during the quarter, reflecting increased sales of organic feed, and specialty corn and soy, offset by continued soft market conditions for sunflower.
The Consumer Products segment generated revenues of $180.6 million during the fourth quarter of 2018, an increase of 9.1 percent compared to $165.5 million in the fourth quarter of 2017. Excluding the impact of commodity-related pricing and sales of resealable pouch and nutrition bar products, Consumer Products revenue in the fourth quarter increased by 16.3 percent. The growth primarily reflects a 17.8 percent increase in the Healthy Beverage platform consisting of higher sales of aseptic non-dairy products and the expansion of broth products, combined with a 17.3 percent revenue increase in the Healthy Fruit platform due to distribution gains with key retail customers and timing of deliveries to a large food service customer.
