Ingredion Incorporated (Westchester, IL) announced it has entered into a definitive agreement to acquire Penford Corporation, a U.S.-based leader in specialty ingredients for food and non-food applications.
Ilene Gordon, chairman and CEO, Ingredion, said the acquisition is another step in executing our strategic blueprint for growth. “It expands our higher-value specialty portfolio, establishes manufacturing of specialty potato starches in North America, and builds our presence in nature-based hydrocolloid ingredients, said Gordon. “Penford’s range of products addresses growing consumer trends, including nutrition, gluten-free, food textures, and sustainable green solutions. The added capabilities will further enhance our efforts to deliver new, value-added solutions to the marketplace.”
The acquisition has been approved by the boards of directors of both companies, and it is subject to approval by Penford’s shareholders and regulators as well as to other customary closing conditions and could close as early as the end of the year, reported Ingredion, noting the company expects to fund the approximately $340 million cash transaction with available cash and funds available under existing credit facilities.
Thomas Malkoski, president and CEO, Penford, said this is a tremendous opportunity to combine Penford’s and Ingredion’s complementary product portfolios and capabilities. Ingredion is a recognized innovator in food ingredients and sustainable green solutions. “The expanded portfolio and geographic reach of the combined company will enable new and exciting solutions for their customers and ours,” he said.
A leader in specialty ingredients, Penford had net sales of $467 million in fiscal year 2013 and supplies a broad range of texture solutions for food, including customized combinations of texture ingredients with a particular emphasis on potato starches, according to Ingredion, noting Penford operates six plants in the United States, all of which make specialty starches. Its headquarters are based in Centennial (Denver area), Colorado.
“We are confident that this acquisition will create long-term value for our shareholders,” said Gordon.
The transaction is expected to generate annual cost synergies of at least $20 million, primarily from efficiencies in the areas of manufacturing, procurement, logistics and general and administrative functions. “We will move quickly to integrate the businesses, attain synergy savings and provide a broader offering of higher-value specialty products to our customers around the world,” said Gordon.