ConAgra Foods Inc. (CAG), Cargill and CHS Inc. (CHSCP) 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.
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.
Ardent Mills will bring together two of flour milling companies: ConAgra Mills and Horizon Milling, a Cargill-CHS joint venture formed in 2002.
Ardent Mills will operate as an independent joint venture of its three parent companies, Omaha, Neb.-based ConAgra Foods, Minneapolis, Minn.-based Cargill and St. Paul, Minn.-based CHS. Dan Dye, who currently serves as president of Horizon Milling, will lead Ardent Mills as chief executive officer once the new company is formed.
Dye will be joined by Bill Stoufer, current president of ConAgra Mills, as Ardent Mills' chief operating officer and chief integration officer. The company's operations and services will be supported by 44 flour mills, three bakery mix facilities and a specialty bakery, all located in the U.S., Canada and Puerto Rico. The location of its headquarters will be determined at a later date.
ConAgra Foods and Cargill will each own a 44 percent stake in Ardent Mills, with CHS owning a 12 percent interest. All three companies will have representatives on Ardent Mills' board of directors.
ConAgra Foods, Cargill and CHS will contribute their respective milling operations to Ardent Mills on a cash-free, debt-free basis in exchange for the agreed ownership interests. 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 structure and amount of Ardent Mills' debt financing will be determined during the pre-close period. 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.
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