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DOJ Requires ConAgra, Cargill And CHS To Sell Four Mills To Complete JV

The U.S. Department of Justice said Tuesday that it will require ConAgra Foods Inc. (CAG), Cargill Inc., CHS Inc. (CHSCP), and Horizon Milling LLC to sell four flour mills in order to proceed with the formation of their flour milling joint venture, Ardent Mills.

Ardent Mills would combine the flour milling assets of ConAgra Mills, a subsidiary of Omaha, Nebraska-based ConAgra Foods, and Horizon Milling, a joint venture formed in 2002 between Minneapolis, Minnesota-based Cargill and St. Paul, Minnesota-based CHS.

The Department of Justice or DoJ noted that the sale of the four mills will preserve flour milling competition in four regions of the country encompassing large cities such as Los Angeles, Dallas, Minneapolis and the San Francisco/Oakland Bay Area. This will result in more competitive prices for wheat flour purchasers and ultimately, lower prices for consumers who purchase wheat flour-based products, such as bread, cookies and crackers.

The DoJ said its antitrust division filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to block the proposed joint venture.

According to the complaint, the proposed joint venture would eliminate head-to-head competition between ConAgra Mills and Horizon Milling in the relevant markets, and increase the likelihood that flour milling capacity would be closed. Further, it would increase the possibility of anti-competitive coordination among flour millers, which would raise flour prices for customers in the relevant markets.

At the same time, the DoJ filed a proposed settlement that would resolve the competitive concerns alleged in the lawsuit, if approved by the court. The proposed settlement requires the companies to divest four mills to Miller Milling Co. LLC - ConAgra's mills in Oakland, California; Saginaw, Texas; and New Prague, Minnesota; and Horizon Milling's Los Angeles mill.

Minneapolis-based Miller Milling is a subsidiary of Japan-based Nisshin Seifun Group Inc.

In a separate statement, ConAgra Foods, Cargill and CHS said that they expect Ardent Mills to commence operations on or about May 29, 2014. The announcement follows the conclusion of regulatory review by the DoJ and the successful completion of all international regulatory clearances. However, the transaction remains subject to financing and other certain customary closing conditions.

The companies noted that Ardent Mills will operate as an independent joint venture of its three parent companies. ConAgra Foods and Cargill will each own a 44 percent stake in Ardent Mills, while CHS will own the remaining 12 percent stake. All three companies will have representatives on Ardent Mills' board of directors.

ConAgra Foods and Cargill expect to complete the sale of the four flour milling facilities to Miller Milling prior to May 29. Following the completion of the joint venture, Ardent Mills' operations and services will be supported by 40 flour mills, three bakery mix facilities and a specialty bakery, all located in the U.S., Canada and Puerto Rico.

Ardent Mills' headquarters will be located in Denver. The new company is expected to have a presence in downtown Denver starting in 2014 and operate satellite offices in Omaha, Nebraska as well as Minneapolis, Minnesota.

CAG closed Tuesday's trading at $31.26, down $0.11 or 0.35 percent on a volume of 1.43 million shares. CHSCP closed trading at $32.03, down $0.06 or 0.19 percent on a volume of 13,037 shares.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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