MINNEAPOLIS (AP) — The biggest U.S. flour miller is getting a lot bigger.
ConAgra Foods is combining its flour milling business with Horizon Milling — a joint venture of Cargill Inc. and CHS Inc. that was already No. 1 — to create a new joint venture called Ardent Mills.
The three companies said the deal announced Tuesday will create a business that will have a broader view of the marketplace and be able to serve their customers better.
Ardent Mills will have 44 flour mills, three bakery mix facilities and a specialty bakery, all located in the U.S., Canada and Puerto Rico. There are no plans at this time to close any of the facilities, ConAgra Foods spokeswoman Becky Niiya said.
ConAgra Mills had about $1.8 billion in sales for fiscal 2012, while Horizon Milling had sales of approximately $2.5 billion.
ConAgra Mills employs about 1,000 people while Horizon Milling has about 1,400, Niiya said. Staffing levels for the new business haven't been determined, she said.
The deal is subject to regulatory clearances. ConAgra's Niiya said the companies will cooperate if the Federal Trade Commission or Department of Justice has questions.
"We strongly believe the formation of Ardent Mills will enhance competition and customer and consumer choice," Niya said.
The leadership of the new organization still needs to get together and decide where Ardent Mills fits into the marketplace, CHS spokeswoman Lani Jordan said.
ConAgra Foods Inc. and the privately-held Cargill will each get a 44 percent stake in Ardent Mills while CHS will get the remaining 12 percent.
"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 Foods Inc. CEO Gary Rodkin said in a statement.
Horizon Milling is the largest U.S. milling company as measured by production capacity, followed by ADM Milling and ConAgra Mills, according to the 2013 Grain & Milling Annual, compiled by Sosland Publishing Co. of Kansas City, Mo. Horizon has a daily capacity of 290,500 hundredweight, compared with 281,100 hundredweight for ADM Milling and 255,100 hundredweight for ConAgra Mills, the report says.
"It's not about getting bigger, it's about serving customers better," Cargill spokeswoman Lisa Clemens said. She added that "there are about 25 major milling companies so it's a very competitive business,"
ConAgra Foods' brands include Banquet and Chef Boyardee. Cargill, based in Minnetonka, Minn., is a producer and marketer of food, agricultural, financial and industrial products and services. Arden Hills, Minn.-based CHS is an agribusiness owned by farmers, ranchers and cooperatives across the U.S.
The companies expect to receive cash distributions from Ardent Mills at closing. Total proceeds are estimated to be between $800 million and $1 billion.
All three companies will have representation on the Ardent Mills board.
Ardent Mills will be run as a joint venture, with Dan Dye serving as its CEO once the new company is formed. Dye is currently president of Horizon Milling. ConAgra Mills President Bill Stoufer will become Ardent's chief operating officer and chief integration officer.
Ardent Mills' headquarters will be determined at a later date. Its formation is expected to be finished later this year.
ConAgra Foods shares rose 11 cents to $34.80 in afternoon trading Wednesday after rising as high as $34.95 earlier in the session, its highest level since August 1997.