Home » Ingredion to acquire Penford for approximately $340 million
Westchester, Ill.-based Ingredion Inc., a global ingredients solutions provider specializing in nature-based sweeteners, starches and nutrition ingredients, entered into a definitive agreement to acquire Penford Corp., a Centennial, Colo.-based leader in specialty ingredients for food and non-food applications.
The purchase price of approximately $340 million represents a synergy-adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) multiple of approximately seven times on an enterprise-value basis. Excluding one-time costs, in the first year the transaction is expected to be $0.10-$0.15 accretive to earnings on a per share basis. Ingredion expects to fund the transaction with available cash and funds available under existing credit facilities.
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.
“This acquisition is another step in executing our strategic blueprint for growth,” said Ilene Gordon, Ingredion chairman and chief executive officer, in a statement. “It expands our higher-value specialty portfolio, establishes manufacturing of specialty potato starches in North America, and builds our presence in nature-based hydrocolloid ingredients. 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.”
Thomas Malkoski, president and chief executive officer of Penford, added: “This is a tremendous opportunity to combine Penford’s and Ingredion’s complementary product portfolios and capabilities. Ingredion is a recognized innovator in food ingredients and sustainable green solutions. The expanded portfolio and geographic reach of the combined company will enable new and exciting solutions for their customers and ours.”
Penford had net sales of $467 million in fiscal year 2013. The company supplies a range of texture solutions for food, including customized combinations of texture ingredients with an emphasis on potato starches. Penford’s 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 United States, all of which make specialty starches.
"We are confident that this acquisition will create long-term value for our shareholders," Ingredion’s Gordon said in a statement. The transaction is expected to generate annual cost synergies of at least $20 million, primarily from efficiencies in the areas of manufacturing, procurement, logistics and general and administrative functions.
"We will move quickly to integrate the businesses, attain synergy savings and provide a broader offering of higher-value specialty products to our customers around the world," she added.
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