Connors Bros. Unloads Red Meat Business
The owner of the Bumble Bee canned tuna brand announced yesterday that it sold its Castleberry's red meat business to Aunt Kitty's Foods, a subsidiary of Hanover Foods of Hanover, Pa.
The deal is expected to close later this week. Terms were not disclosed.
In the first half of this year, Castleberry's generated about $23 million in revenue for Connors Bros. Income Fund.
However, last July, the Toronto company voluntarily recalled canned hot dog chili and other canned meat products from Castleberry's Augusta, Ga., plant after a botulism outbreak sickened at least eight people in Ohio, Illinois and Texas. The plant was closed for two months last year and again for three weeks in March.
Connors Bros., which purchased Castleberry/Snow's Brands for $93 million in 2004, posted a net loss of more than $70 million in the fourth quarter of 2007 as a result of the recall, and in February the company began exploring the sale of Castleberry's.
However, Connors Bros. - whose brands include Bumble Bee, Clover Leaf, Brunswick, Sweet Sue and Bryan -increased its seafood sales by 4.5 percent last year.
Hanover will acquire the Castleberry's brand, inventory and some equipment related to its chili, stew, hash and other meat products. Hanover, which produces glass-pack, canned, frozen, refrigerated and freeze-dried food products, will shut down the Augusta, Ga., plant after a 60-day transition period, affecting 300-plus employees.
"Following a strategic review of the meats business, we recognized that these products did not align with the core competencies of the company and were inconsistent with the rest of our portfolio," says Chris Lischewski, president and CEO of Connors Bros. "Selling this business and, consequently, having to close the factory was a difficult decision to make particularly as the employees in Augusta have worked very hard over the past year."