The maker of Shreddies, Honeycomb and Alpha-Bits cereals is set to take a major U.S. pasta processing plant off Viterra's hands.
Regina-based Viterra's owner, Swiss commodity giant Glencore Xstrata, announced Monday it will sell Dakota Growers Pasta Co. to Post Holdings for $370 million cash (all figures US$). The deal is expected to close in January 2014.
For Glencore, the deal marks another sell-off of assets from Canada's biggest grain handler, outside of its Canadian and Australian commodity grain handling business.
Viterra assets that have either been sold or committed for sale since its takeover by Glencore last year include its Canadian and Australian crop input retail businesses, Canadian and U.S. oat milling operations and Australian malting business among others.
For Dakota Growers, with durum wheat milling and pasta production operations at Carrington, N.D. plus production capacity in the Minneapolis area, the deal so far means business as usual under its existing management team, led by vice-president Ed Irion and managed "independently" from other Post businesses.
"With Dakota Growers, Post continues to expand its portfolio into segments of the overall food industry where it sees opportunities to grow and diversify its strong cash flow," Post CEO William Stiritz said in a separate release Monday.
St. Louis-based Post said the deal, to be funded through cash on hand and up to $200 million in debt financing, is expected to add about $300 million to annual sales and about $42 million to $46 million in earnings before interest, taxes, depreciation and amortization (EBITDA).
Post, which spun off from General Foods last year as an independent publicly-traded company, has set up the Dakota Growers deal as a stock purchase in which it will buy all stock in the processor's Viterra-owned parent, Agricore United Holdings.
Viterra bought Dakota Growers for $240 million in March 2010. A Reuters report in July this year, citing unnamed sources, said Dakota Growers was up for sale and could be valued between $300 million and $400 million.
Dakota Growers' production mainly goes to ingredients for other food companies but also to the foodservice and private-label retail sectors. It makes the Dreamfields brand of low-carb pastas, among about 100 different shapes of pastas including whole grain, multigrain and "omega-3" varieties.
Dakota Growers started operations at Carrington, about 200 km northeast of Bismarck, in 1993, with the backing of about 1,100 U.S. Midwest farmers, using Italian-made equipment to process durum wheat into pasta. It later bought a second pasta plant at New Hope, just west of Minneapolis. -- AGCanada.com Network
Glencore said seeking buyer for Viterra's U.S. pasta play, July 12, 2013
Viterra to buy North Dakota pasta maker,
March 10, 2010