Ingredion to acquire Penford

by Keith Nunes
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Penford supplies a range of texture solutions for food, including customized combinations of texture ingredients with a particular emphasis on potato starches.

 

WESTCHESTER, ILL. — Ingredion, Inc. has entered into an agreement to acquire Penford Food Ingredients, Centennial, Colo., for $19 per share. The transaction is valued at approximately $340 million and has been approved by the board of directors of both companies.

“This acquisition is another step in executing our strategic blueprint for growth,” said Ilene Gordon, chairman and chief executive officer of Ingredion. “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.”

Penford had net sales of $467 million in fiscal 2013. The company supplies a range of texture solutions for food, including customized combinations of texture ingredients with a particular 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.

“This is a tremendous opportunity to combine Penford’s and Ingredion’s complementary product portfolios and capabilities,” said Thomas Malkoski, president and c.e.o. of Penford. “Ingredion is a recognized innovator in food ingredients and sustainable green solutions. The expanded portfolio and geographic reach of the combined companies should enable new and exciting solutions for their customers and ours.”

The purchase price represents an EBITDA multiple of approximately seven times on an enterprise-value basis, according to Ingredion. Excluding one-time costs, in the first year the transaction is expected to be 10c to 15c accretive to the company’s earnings on a per share basis.
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