ConAgra, Cargill and CHS Form Joint Venture for Flour Milling
ConAgra Foods, Cargill and CHS on March 5 announced a definitive agreement to combine their North American flour milling businesses to form Ardent Mills, a new flour milling company that will serve customers in the baking and food industries.
It joins ConAgra Mills and Horizon Milling, a Cargill-CHS joint venture formed in 2002. Its products will be backed by an extensive network of wheat sourcing capabilities and flour milling and bakery mix facilities across North America: 44 flour mills, three bakery mix facilities and a specialty bakery, all located in the U.S., Canada and Puerto Rico.
Ardent Mills will offer a unique set of services, including product development resources, technical and application support, supply chain management and commodity price risk management. The company also will tap the market knowledge, transportation logistics, consumer insights, food ingredients and culinary expertise available through ConAgra Foods, Cargill and CHS.
The new company will operate as an independent joint venture of its three parent companies. ConAgra Foods (Omaha, Neb.) and Cargill (Minneapolis) each will own a 44 percent stake in Ardent Mills, with CHS (St. Paul, Minn.) owning a 12 percent interest. All three companies will have representatives on Ardent Mills’ board of directors. The location of its headquarters will be determined at a later date.
Dan Dye, who currently serves as president of Horizon Milling, will be CEO. Bill Stoufer, current president of ConAgra Mills, will be chief operating officer and chief integration officer.
“We’re excited about this unprecedented step to further our heritage in milling while creating long-term value for ConAgra Foods’ shareholders,” said ConAgra Foods CEO Gary Rodkin. “Ardent Mills will set the new industry standard by addressing the most important issues facing customers, such as commodity price volatility, increasingly sophisticated food safety requirements, the need for more cost-effective supply chains and growing market demand for more innovation in products and processes.”
“The future of flour milling is tied to serving the innovation and supply chain management challenges of food producers,” said Scott Portnoy, corporate vice president, Cargill. “This is what makes us excited about Ardent Mills. It will have the knowledge and experience to help customers develop foods that appeal to consumers’ changing taste and texture preferences, while also meeting their nutritional needs. It also will have the assets and capabilities to help customers improve the efficiency of their supply chains and strengthen their commodity risk management.”
“As part of Ardent Mills, CHS farmer-owners will have more opportunity to further connect the wheat they produce to the consumer marketplace,” said Mark Palmquist, executive vice president and chief operating officer of Ag Business at CHS. Palmquist added that CHS, the nation’s leading producer-owned cooperative, will be among the new company’s wheat suppliers.
Sales for ConAgra Mills, currently a part of ConAgra Foods’ Commercial Foods segment, were approximately $1.8 billion in its fiscal year ended May 27, 2012. Sales for Horizon Milling were approximately $2.5 billion in its fiscal year ended May 31, 2012. The owners intend for Ardent Mills to be self-financed through cash flow from operations and its own bank debt and credit facility. The owners intend to receive cash distributions from Ardent Mills at closing. Initial estimates of the total proceeds to be distributed range from $800 million to $1 billion.
The formation of Ardent Mills is expected to be completed in late calendar year 2013, following regulatory clearances, financing and the satisfaction of customary closing conditions.