Ingredion has entered into a definitive agreement to acquire US-based Penford Corporation that supplies specialty ingredients to food and non-food applications.
The acquisition has been approved by the boards of directors of both companies.
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.
Ingredion expects to fund the approximately US$340 million cash transaction with available cash and funds available under existing credit facilities.
“This acquisition 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 Ilene Gordon, Ingredion chairman and CEO.
“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.”
Penford had net sales of US$467 million in fiscal year 2013.
The company supplies a broad range of texture solutions for food, including customized combinations of texture ingredients with a particular emphasis on potato starches.
Its starch-based products for non-food applications include sustainable, nature-based solutions designed to replace synthetic ingredients.
With approximately 445 employees, Penford operates six plants in the US, all of which make specialty starches.
“The transaction is expected to generate annual cost synergies of at least US$20 million, primarily from efficiencies in the areas of manufacturing, procurement, logistics and general and administrative functions,” said Gordan.