McCain Foods said Wednesday it has signed a deal to sell its North American frozen pizza business to Dr. Oetker GmbH.
Financial terms of the deal were not immediately available.
The deal covers the Ellio's brand in the U.S. and a two-year licence for the use of the McCain brand in Canada.
The company said pizza represents a small portion of its North American business and the move will allow it to focus on other areas.
The sale includes its operations in Grand Falls, N.B., and Lodi, N.J. The company said McCain employees at both locations will be offered employment with Dr. Oetker.
"McCain is committed to its employees, and Dr. Oetker's commitment to their continued employment was an important factor in the decision," McCain Foods president and chief executive Dirk Van de Put said in a statement.
"We believe the transaction is good for our employees, good for our customers and good for McCain."
'Dr. Oetker expects this will be a smooth transition.' - Leslie Walsh
McCain will keep its pizza pockets business in Canada as well as its pizza businesses outside of North America.
The deal gives Dr. Oetker a significant boost in North America.
"The McCain business is a perfect fit for us and furthers our strategic goal of establishing ourselves as leader in the Canadian frozen pizza market and therewith strengthening our position in this market as well as expanding our position in the northeast of the U.S.," said Richard Oetker, chairman of the executive board of Dr. Oetker.
"Adding two new production locations to the pizza factory that was opened in London, Ont., in May 2014, means we are ideally positioned to meet the growing demand for Dr. Oetker pizzas in Canada and the United States."
The deal is subject to regulatory approval in Canada.
Leslie Walsh, speaking on behalf of Dr. Oetker says the company looks forward to welcoming the McCain employees into the fold.
"Dr. Oetker expects this will be a smooth transition," she says. "More than just technology, with this acquisition Dr. Oetker will be joined by McCain Foods employees and looks forward to welcoming them to the Dr. Oetker family in London and Mississauga, Ontario. Dr. Oetker recognizes the contributions of the men and women working in Grand Falls and is pleased to be extending offers of continued employment including retained seniority."
Agricultural economist with University of Guelph, Sylvain Charlebois says the pizza business is a difficult one.
"Cost management and efficiencies. Across food supply chains, companies are recalibrating resources to focus more on core competencies," he explains. "McCain may have decided that making pizzas is not consistent with their present/future business model. Due to global trades, it's challenging, more than ever, to remain competitive any many fields at once. And frankly, value chains to support pizza production are extremely difficult to manage due to the number of ingredients."
Earlier this month, McCain Foods announced it would close a French fry plant on Prince Edward Island at the end of October, a move that will cost 121 jobs.
The company said at the time that there has been a shift in demand for its French fries from North America to other parts of the world, which was a factor in its decision.