Tyson Foods has signed a letter of intent to sell the packing, feedyard and fertiliser assets of Lakeside Farm Industries Ltd and its subsidiary Lakeside Packers, to XL Foods Inc., a Canadian-owned beef processing business.

Tyson said the operations no longer fitted its long-term strategy.

The C$107m (US$106m) transaction includes C$57m, which will be paid at closing. The remaining C$50 million, plus interest, will be paid over a five-year period following closing.

The transaction, which remains subject to government approvals, should be completed by the end of September.

"Lakeside is one of the premier beef processing operations in Canada and has operated successfully for many years," said Richard L. Bond, president and CEO of Tyson Foods. "However, Lakeside no longer fits the long-term strategy of our company, as our current international strategy is focused primarily in Asia, Mexico and South America."

Lakeside Farm Industries, based in Brooks, Alberta, is a diversified agribusiness involved in cattle feeding, slaughtering and processing, as well as retail fertiliser production and farming.

Lakeside currently employs 2,300 people and currently has the capacity to slaughter and process 4,700 cattle per day. The commodity boxed beef produced by the plant is primarily sold to customers in Canada and the U.S.

XL Foods plans to continue operating the Lakeside facility after the sale is completed.

"We believe the Lakeside plant and cattle feeding operation will complement our other beef operations in Alberta and Saskatchewan," said Brian Nilsson, co-chief executive officer of XL Foods Inc. and Nilsson Bros. Inc. "In addition, it will help strengthen our ability to meet the needs of our North American customer base."

XL is part of the Nilsson Bros. Group, a Canadian cattle feeding and marketing company.

"We intend to make the transition of ownership as smooth as possible," said Nilsson. "At the appropriate time, this will include informational meetings with members of the Lakeside staff."