BOCA RATON, FLA. — When it comes to potential mergers and acquisitions, Ingredion, Inc. prefers to seek out opportunities that offer shared value creation, said James P. Zallie, president and chief executive officer of Westchester, Ill.-based Ingredion.
Mr. Zallie’s comments came in response to an analyst’s question regarding how active the M&A pipeline might be today during a Feb. 22 presentation at the Consumer Analyst Group of New York conference in Boca Raton.
“We always have a very active M&A pipeline that we’re continuously working, because a lot of those M&A moves that we made were built on long-term relationships that we had developed with, in some cases, private companies,” Mr. Zallie said.
He said Ingredion has opted to build off of already-established multiyear relationships and has been less inclined to venture into new partnerships. He cited the company’s 2017 acquisition of TIC Gums, Inc., 2019 purchase of Western Polymer and 2020 acquisition of PureCircle as examples of M&A activity that was borne out of a previous relationship with the acquired companies.
But moving forward Ingredion will look at all ways to transform its portfolio, Mr. Zallie said.
“We want to get specialties to be a heavier weighting in comparison to the core despite the fact that the core ingredients portfolio we believe right now is solid given our market positions and given the market conditions and the industry fundamentals that have really changed more favorably in the last couple of years, and we anticipate will remain favorable for the next couple of years,” he said. “Despite that, strategically because of the 2x to 3x gross margin lift compared to core with specialties, we’re looking for those specialties opportunities. So we have a very active pipeline.”
He continued, “Expect us to continue to look at bolt-on acquisitions. In today’s current economic environment, I don’t think we’re going to do anything that’s going to be overly stretching to the portfolio from a standpoint of our balance sheet.”
James Gray, executive vice president and chief financial officer, added that Ingredion has a strong record for integrating and squeezing out synergies from M&A.“We have good cash generation, and we have some room on the balance sheet to definitely go after attractive specialty companies that we think would really complement the strategy,” Mr. Gray said.