Land O'Lakes nabs Southern States feed unit

Krissa Welshans and Sarah Muirhead 1, Editors

December 1, 2016

3 Min Read
Land O'Lakes nabs Southern States feed unit

LAND O'Lakes Inc. has signed a letter of intent to acquire the animal feed business of Southern States Cooperative Inc.

The letter follows the announcement earlier this year that Southern States had entered into a supply agreement with Land O'Lakes through its WinField United unit.

Southern States said the intent of entering into discussions with Land O'Lakes is not to get out of the feed business but, rather, to get out of the feed manufacturing business.

The letter "opens the conversation" and involves Southern States' feed manufacturing assets, including its seven feed mills. Its retail stores are not included.

In total, not including pet food, feed makes up 20% of Southern States' overall business. The co-op's branded pet foods are currently manufactured by Pro Pet and, at this time, are not included in the letter of intent signed by Land O'Lakes and Southern States.

Combining the feed businesses of the two co-ops would strengthen Land O'Lakes' number-two position in the feed industry, with a combined estimated annual tonnage of 13,700 million metric tons for 2014. Cargill Animal Nutrition would remain the number-one player in the market at an estimated 19,200 mmt.

"This is an excellent opportunity to expand our relationship with Southern States and increase our animal feed business in the eastern U.S.," said Chris Policinski, Land O'Lakes president and chief executive officer.

The proposed acquisition reinforces a commitment by both parties to provide industry-leading products and services that help their customers continue to compete in an era of industry consolidation.

"We are looking forward to engaging with the Southern States members and customers to understand their needs," Beth Ford, group executive vice president and chief operating officer of Land O'Lakes, added. "We plan to provide uninterrupted access to the Southern States-branded products customers trust for their animals, and we will work every day to deliver the quality, innovation and expertise they expect of us."

Jeff Stroburg, president and CEO of Southern States, said, "We are pleased with the opportunities this partnership with a fellow cooperative brings to Southern States. Our members will continue to receive the same level of service from our retail locations while benefitting from Land O'Lakes' feed business, Purina Animal Nutrition, and their knowledge and experience in manufacturing the quality feed our customers expect."

The purchase is expected to be completed in January 2017.

Land O'Lakes is a member-owned cooperative with industry-leading operations that span the spectrum from agricultural production to consumer foods. With 2015 annual sales of $13 billion, it is one of the nation's largest cooperatives. Building on a legacy of more than 95 years of operation, Land O'Lakes today has some of the most respected brands in agribusiness and food production, including LAND O LAKES Dairy Foods, Purina Animal Nutrition and WinField United. Land O'Lakes' corporate headquarters are in Arden Hills, Minn.

Southern States, established in 1923, is a Richmond, Va.-based farm supply and service cooperative that now has more than 200,000 farmer-members. As one of the nation's largest agricultural cooperatives, it provides a wide range of farm inputs, including fertilizer, seed, livestock feed, pet food, animal health supplies and petroleum products, as well as other items for the farm and home. The cooperative serves its members and non-member customers through 1,200 retail outlets in 23 states.

Volume:88 Issue:12

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