Flour milling | New company, Ardent Mills, will control 34 percent of U.S. market and have two Canadian plants
(Reuters) — Giant U.S. food and grain-handling companies ConAgra Foods Inc., Cargill and CHS Inc. plan to combine their North American flour milling businesses into a new company called Ardent Mills.
The venture, which the companies expect to launch later this year, encompasses 44 flour mills, three bakery mix facilities and a specialty bakery, with locations in the United States, Canada and Puerto Rico.
The venture would control roughly 34 percent of the U.S. market in terms of milling capacity, with total daily wheat and durum flour capacity for the combined company around 576,100 hundredweight.
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The venture will aim to serve bakery and food companies with more cost-effective supply chains and more innovative products and processes, the companies said in a joint statement.
By combining operations, which last year did roughly $4.3 billion in sales, the three also hope to better handle commodity price volatility and increasingly sophisticated food safety requirements, they said.
“The future of flour milling is tied to serving the innovation and supply chain management challenges of food producers,” Scott Portnoy, corporate vice-president of Cargill, said in a written statement.
“It (Ardent Mills) 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.”
Ardent Mills will combine ConAgra Mills with Horizon Milling, the joint venture that Cargill and CHS formed in 2002.
Horizon is considered the No. 1 U.S. miller in terms of milling capacity and ConAgra is third after ADM Milling.
In Canada, Horizon has mills in Saskatoon and Montreal and in 2011 announced plans for a mill in Guelph, Ont. It sells Robin Hood brand flour. ConAgra Mills does not have facilities in Canada.
Omaha, Nebraska-based ConAgra and Minneapolis-based Cargill will each have a 44 percent stake in the joint venture.
CHS, based in St. Paul, Minnesota, will control the remaining 12 percent. All three companies will have representatives on the Ardent board.
Horizon is seen as the top U.S. milling company, with total daily milling capacity of 290,500 cwt., followed by ADM Milling, which has 281,100 cwt. daily milling capacity and ConAgra with 255,100 cwt. daily milling capacity.
Horizon Milling president Dan Dye will become chief executive officer of the new company, and Bill Stoufer, current president of ConAgra Mills, will become Ardent Mills’ chief operating officer and chief integration officer.
The headquarters will be determined later.
If antitrust concerns do develop, the government could require some sort of asset divestitures. But Cargill corporate vice-president Scott Portnoy said in an interview that the “complete asset footprint” of combined operations was a key reason for the deal.
He said Ardent did not want to close or sell off any of the mills, even as some raised questions about anti-trust issues.
