Acquisition mode for Darling International
When it comes to companies in acquisition mode, one cannot ignore Darling International and its recent activities. Two days ago, the firm announced it has completed acquisition of Terra Renewal Services, a leading provider of essential environmental services focused on the collection, hauling, reprocessing, and recycling of waste cooking oil and disposal of nonhazardous, liquid and semi-solid waste streams from the food processing industry. Terra Renewal has operations in more than 24 states. The purchase price for the transaction was about $120 million in cash with an EBITDA of approximately $22 million a year.
Just a few days earlier, the company announced it entered into a definitive agreement to acquire all of the assets of renderer and biodiesel producer Rothsay, a division of Maple Leaf Foods Inc., for approximately CAD $645 million in cash. Rothsay is the leading recycler of animal byproducts in Canada. Rothsay has a network of five rendering plants in Manitoba, Ontario and Nova Scotia, and a biodiesel operation in Quebec, Canada. Rothsay employs approximately 550 people and generated approximately CAD $85 million of EBITDA over each of the past two fiscal years.
Randall C. Stuewe, Darling International's Chairman and CEO said, "The combination of our two companies will create North America's leading provider of independent rendering and recycling services.”
Darling expects to finance the transaction through a combination of borrowings under a new Senior Secured Revolving Credit Facility and Term A Bank Loan Facility, which will be entered into in connection with the closing of the transaction. BMO Capital Markets Corp. served as financial advisor, K&L Gates and Bennett Jones served as legal counsel to Darling, and J.P. Morgan Securities LLC will lead the debt financing.
Diamond Green Diesel, a Darling International and Valero joint venture, started operations earlier this summer. This is a large renewable diesel facility with the capacity to produce 9,300 barrels a day, or around 140 MMgy. Yesterday Darling reported that after a successful startup of the facility, it has been determined that a heat exchanger must be replaced to improve the plant's reliability under actual process conditions. The plant will continue to operate during the replacement of the heat exchanger, which is expected to be completed by mid-October, but thru put rates will be lowered to approximately 5,000-7,000 barrels per day during this time. Installation of this heat exchanger is expected to help it achieve improved production rates in the long term.