A storied Vancouver-area meat processor is expected to put some “significant underutilized capacity” to work when its new owner-in-waiting shuts down its own deli meat plant in the region.
Vancouver food processing firm Premium Brands announced Monday it’s signed a deal to buy deli meat manufacturer Freybe Gourmet Foods of Langley for $55 million.
Freybe, a family-owned business which was founded in Stettin (then in Prussia, now in Poland) in 1844 and came to Vancouver in 1955, produces over 120 varieties of hams, sausages and specialty meats out of a “state-of-the-art” 118,000-square foot plant built in 2001 at Langley, and books annual sales of about $78 million.
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Premium Brands CEO George Paleologou said the Langley plant’s capacity presents “an ideal solution for replacing the capacity of our deli meats production facility in Richmond, B.C., which is scheduled to be shut down later this year.”
Details about the Richmond plant’s closure weren’t immediately available Monday, but Paleologou said in Premium’s release that by shifting the Richmond plant’s work to Langley, rather than to Premium’s other plants in Eastern Canada, the company expects to gain “significant cost and freight synergies.”
Freybe’s capacity, he said, will also support Premium’s growth in the U.S. by supplying Premium-owned Hempler Foods Group, based at Ferndale, Wash., about 35 km south of Langley.
The deal “will give us access to additional resources such as Premium Brands’ proprietary distribution networks (and) means even more people will have the opportunity to enjoy Freybe products as we look forward to an exciting period of expansion,” Freybe CEO Sven Freybe, who will continue to run the business for Premium, said Monday in a separate release.
Henning Freybe, who now retires as the Freybe business’ chairman, said his family “is very proud of the business we have built over the last six generations but we recognized that we needed a partner to help Freybe in the next stage of its evolution.”
Premium noted its purchase price for the Freybe businsess will increase by up to $1.25 million per year for each of the next four years if Freybe is “able to achieve certain performance targets.”
Premium also plans to sell Freybe’s Langley plant to a limited partnership in which Premium would hold a 35 per cent interest, then lease the plant back from that partnership. Premium said that sale would yield net proceeds of about $22.8 million.
Related stories:
Premium Brands to buy Canada Bread sandwich business, Feb. 14, 2011
Deli meat packer shuts down Mississauga plant, Aug. 2, 2010
Premium Brands gone corporate, July 23, 2009
