AgFeed Industries, Inc. announced organisational changes and acquisitions agreements in fulfillment of its previously announced entry to the harvest and processing segment of the pork business.
In connection with the ongoing transformation of the company, the board of directors announced executive promotions and reassignments. In addition the board elected a new independent director.
John A. Stadler, AgFeed's chairman & interim chief executive officer, stated, "Our vision is to align global production resources to supply safe pork and pork products to the consumer through our branded pork processor customers. These executive changes and acquisition opportunities represent the natural progression of the strategic direction initiated during the spring of 2010, and first fully visible through the acquisition of M2P2, to develop an integrated, controlled, production system that would allow us to capture earnings throughout the international hog/pork production process."
The board has appointed one of its current members, K. Ivan F. Gothner, as vice chairman to work along side Mr. Stadler in the ongoing transformation, development and growth of the company. In addition, Glenn McClelland, the current president & CEO of the company's US based hog production business, M2P2, has been appointed our chief operating officer, while Clay Marshall, the current CFO of M2P2, has been appointed our chief financial officer.
In addition to these executive changes the board appointed David Michael Johnson as a director. Mr. Johnson is currently the president and chief executive officer of Cattlco, LLC, which is among the 25 largest cattle feeding operations in the United States. Prior to becoming president and chief executive officer of Cattlco, Mr. Johnson held executive positions with privately held companies involved in natural resources, agribusinesses and real estate.
The company also announced that it has entered into separate non-binding letters of intent to acquire Pine Ridge Farms, LLC and Kansas City Sausage Company, LLC. It is expected that the combined businesses will add over $180 million of annualised revenue and over $13 million of EBITDA to the company's results.
These acquisitions represent AgFeed's entry into the harvest and processing segment of the pork business and will provide the base of human resources necessary to expand this business and develop this segment of our business as an adjunct to the western-style hog farms under development in China. This processing capability is the necessary precursor to the company's global market strategy.
PRF located in Des Moines, Iowa is a specialty hog processing facility established in January 2004. It has processing capacity of over 3,000 animals per day. PRF manufactures pre-rigor for sausage, fresh and frozen pork products, and private label products. To minimise the earnings volatility common to commodity businesses PRF has initiated a series of innovative projects and initiatives including processing pork hides, custom ham boning operations and butcher pork processing for a major pork production company. PRF currently exports products to China and other Pacific Rim countries.
KCS located in Kansas City, Kansas started operations in late 2009. KCS is a private label sausage company focused on its customer with the upmost confidence regarding food safety, cost effectiveness, price stability and market performance. With customers including major retailers and food service companies, KCS sells products domestically and also exports products to customers in Canada, Mexico, the Caribbean, and the Pacific Rim.
The transactions will be structured as the sale of assets by PRF and KCS to AgFeed. The completion of these transactions is subject to a number of conditions, including the completion of due diligence, negotiations and execution of definitive agreements, board approvals and financing. Pending transaction completion, PRF and KCS have each agreed that its directors, managers, members, officers, employees and agents will not solicit or participate in other negotiations or discussions, or provide non-public information with respect to any investment in, or acquisition of, PRF and KCS, respectively, or any similar transaction for a certain period of time.