The joint venture that runs Canada’s Robin Hood flour mills and baking mix plants is poised to merge into a bigger joint venture with a third major U.S. agrifood player.
Horizon Milling, a joint venture between Cargill and CHS Inc. since 2002, announced Tuesday it plans to bring all its North American assets into Ardent Mills, a new joint venture with the flour milling arm of ConAgra Foods.
With its formation expected to be complete later this calendar year, pending regulatory approvals, financing and other closing conditions, Ardent Mills is to operate as an independent joint venture of all three parent companies, headed by Dan Dye, Horizon Milling’s current president, as the new company’s CEO.
Horizon’s Canadian assets include the former Robin Hood flour mills in Montreal and Saskatoon, the former Robin Hood dry baking mix plants at Burlington, Ont. and Saskatoon, and a product development facility at Burlington. Horizon’s current Canadian head office is at Brampton, Ont.
Horizon Milling bought J.M. Smucker Co.’s Canadian grain-based foodservice and industrial business in 2006 and produces Robin Hood-branded flour and baking mixes for the industrial and foodservice sectors. A third mill it obtained in that deal, at Port Colborne, Ont., was shut down in 2008.
Horizon announced plans in late 2011 to build another flour mill on land it owns at Guelph, Ont., to serve its food processing customers in the southwestern Ontario market.
Cargill spokesperson Lori Fligge said in an email Tuesday there are no changes in the company’s plans for Guelph, which as of December 2011 called for a mill to be built and operating within three years, increasing Horizon’s total Canadian production capacity by up to 30 per cent.
“We view our plans to construct a new flour mill there as a key opportunity for growth in Canada and better serving our customers,” Fligge wrote.
Horizon uses the Robin Hood brand under license from Smucker, which bought the Robin Hood brand as part of its purchase of International Multifoods Corp. in 2004 and whose Canadian arm sells Robin Hood flour and baking products in the retail grocery market. Horizon also produces flour for Smucker’s Robin Hood products under a co-packing agreement.
In all, Cargill and CHS’ combined Horizon assets, based mostly in the U.S., include 21 flour mills, three baking mix facilities and a specialty bakery. ConAgra Foods will contribute its ConAgra Mills operations to Ardent, including 23 flour mills in the U.S., including Puerto Rico.
ConAgra and Cargill will each own a 44 per cent stake in Ardent Mills, while CHS will own the remaining 12 per cent. All three companies will have representatives on Ardent Mills’ board, and the new company’s head office “will be determined at a later date.”
Ardent Mills’ founders said the joint vision will be “to help customers increase their growth and profitability in an ever-changing marketplace” through a “unique set of services, including product development resources, technical and application support, supply chain management and commodity price risk management.”
Ardent is also expected to “tap the market knowledge, transportation logistics, consumer insights, food ingredients and culinary expertise” of its three parent firms.
“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,” ConAgra CEO Gary Rodkin said in Tuesday’s release.
On their new joint website, the Ardent partners said the new venture will provide its farmer suppliers with the opportunity “to add value to the wheat they raise and handle.”
The new company’s asset base, the parent firms said, “will provide additional sourcing opportunities” while its strengths such as product innovation “will enable these growers to further connect to the consumer marketplace.”
CHS’ chief operating officer for ag business, Mark Palmquist, said CHS, as the top farmer-owned co-operative in the U.S., will be among those suppliers.
ConAgra Mills, today part of ConAgra Foods’ commercial foods segment, booked about US$1.8 billion in sales in its last fiscal year ending May 27, while Horizon Milling has about US$2.5 billion in sales during its year ending May 31.
Ardent Mills, the companies said, is to be self-financed through cash flow from operations and its own bank debt and credit facility.
Ardent’s owners said they also intend to receive cash distributions from Ardent upon the deal closing, and put initial estimates of those total proceeds to be distributed at somewhere between US$800 million and $1 billion.
Cargill, CHS plan new flour mill for Guelph, Dec. 13, 2011