CONAGRA Foods, Cargill and CHS announced March 5 a definitive agreement to combine their North American flour milling businesses to form an independently operated joint milling venture, Ardent Mills.
The new company combines the operations of ConAgra Mills and Horizon Milling, a Cargill/CHS joint venture launched in 2002, to serve customers in the baking and food industries and connect the combined assets and capabilities of three of the largest players in U.S. food and agribusiness.
According to industry estimates, ConAgra Mills is the third-largest flour milling company in the country by production capacity, behind ADM Milling. The company posted sales of $1.8 billion during the last fiscal year.
Horizon, on the other hand, is the largest flour milling firm in the nation and reported fiscal 2012 earnings of $2.5 billion. Together, the firms operate 44 flour mills, three bakery mix facilities and a specialty bakery in the U.S., Canada and Puerto Rico.
Operating as a joint venture independent of its three parent companies, Ardent Mills will be led by chief executive officer Dan Dye, currently president of Horizon Milling. ConAgra Mills president Bill Stoufer will serve as the venture's chief operation officer and chief integration officer.
ConAgra and Cargill each will own a 44% share of the new venture, with CHS owning a 12% interest. Each firm will be represented on the Ardent Mills board of directors.
Leaders from the parent firms discussed the importance of supply chain management and integration as a key reason for forming the new venture.
"The future of flour milling is tied to serving the innovation and supply chain management challenges of food producers," Scott Portnoy, Cargill corporate vice president, said. Ardent Mills "will have the assets and capabilities to help customers improve the efficiency of their supply chains and strengthen their commodity risk management."
ConAgra CEO Gary Rodkin added, "Ardent Mills will set the new industry standard by addressing the most important issues facing customers, such as commodity price volatility, increasingly sophisticated food safety requirements, the need for more cost-effective supply chains and growing market demand for more innovation in products and processes."
Ardent Mills is slated for completion in late 2013 pending regulatory approvals and financing conditions. The parent companies will contribute their respective milling operations on a cash-free, debt-free basis in exchange for their ownership interests.
Ardent Mills is expected to be self-financed through cash flow from operations and its own bank debt and credit facility. At closing, the three partners anticipate receiving cash distributions from Ardent Mills totaling roughly $800 million to $1 billion.