OMAHA, NEBRASKA, U.S. — In what would be the largest merger in flour milling history, ConAgra Foods, Inc., Cargill and CHS Inc. announced on March 5 they have reached an agreement to combine their North American flour milling businesses to form a new company to be named Ardent Mills. The combined company will operate 44 flour mills, three bakery mix facilities and a specialty bakery, in the United States, Canada and Puerto Rico. Total daily wheat and durum flour capacity for the combined company will be 576,100 cwts.
The new milling company will operate as an independent joint venture of its three parent companies, Omaha-based ConAgra Foods; Minneapolis, Minnesota, U.S.-based Cargill and St. Paul, Minnesota, U.S.-based CHS. ConAgra Foods and Cargill each will own a 44% stake in Ardent Mills, with CHS owning a 12% interest. 
Cargill and CHS have been partners in Horizon Milling L.L.C. since the joint venture was formed in 2002, creating the nation’s largest flour milling company. Horizon operates 21 U.S. and Canadian flour mills with combined daily flour milling capacity of 321,000 cwts. The creation of Horizon more than 10 years ago was the last large merger involving a top three milling company until the Ardent announcement.
ConAgra, with 23 U.S. flour mills and 255,100 cwts in daily flour milling capacity, ranks as the No. 3 U.S. flour milling company, behind Horizon and ADM Milling Co.
All three companies will have representatives on Ardent Mills’ board of directors. The location of the company’s headquarters will be determined at a later date. The company already has established a website at www.ardentmills.com.
Dan Dye, who currently is president of Horizon Milling, will lead Ardent Mills as chief executive officer (CEO) once the new company is formed. Dye will be joined by Bill Stoufer, the current president of ConAgra Mills, as Ardent Mills’ chief operating officer (COO) and chief integration officer.
“We’re excited about this unprecedented step to further our heritage in milling while creating long-term value for ConAgra Foods’ shareholders,” said Gary Rodkin, CEO of ConAgra Foods. “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.”
Scott Portnoy, corporate vice-president of Cargill, added, “The future of flour milling is tied to serving the innovation and supply chain management challenges of food producers. This is what makes us excited about Ardent Mills. It will have the knowledge and experience to help customers develop foods that appeal to consumers’ changing taste and texture preferences, while also meeting their nutritional needs. It also will have the assets and capabilities to help customers improve the efficiency of their supply chains and strengthen their commodity risk management.”
Mark Palmquist, executive vice-president and COO of Ag Business for CHS, said the move will give CHS farmer-owners “more opportunity to further connect the wheat they produce to the consumer marketplace.” He said CHS will be among the new company’s wheat suppliers.
According to the companies, the name Ardent Mills was chosen because it “conveys strength, passion and commitment to the customer — attributes at the heart of the new company.” The shape of the Ardent Mills logo was inspired by the silhouette of a kernel of wheat, the companies said, and a vertical “arrow” was incorporated in the center to represent the progressiveness of the new company.
The companies noted there was no “single trigger event” that led to the creation of Ardent.
“The concept of combining our milling operations developed over the normal course of business — each of us examining how we do business today and how we might want to adapt and change to better serve our customers tomorrow,” the companies said. “It led us to the shared notion that together we can better serve the baking and food industries.”
ConAgra Foods, Cargill and CHS will contribute their respective milling operations to Ardent Mills on a cash-free, debt-free basis in exchange for the agreed ownership interests. Sales for ConAgra Mills, currently a part of ConAgra Foods’ Commercial Foods segment, were approximately $1.8 billion in the fiscal year ended May 27, 2012. Sales for Horizon Milling were approximately $2.5 billion in its fiscal year ended May 31, 2012.
The owners intend for Ardent Mills to be self-financed through cash flow from operations and its own bank debt and credit facility. The structure and amount of Ardent Mills’ debt financing will be determined during the pre-close period. The owners intend to receive cash distributions from Ardent Mills at closing. Initial estimates of the total proceeds to be distributed range from $800 million to $1 billion, the companies said.
According to the companies, the formation of Ardent Mills is expected to be completed in late calendar year 2013, following regulatory clearances, financing and the satisfaction of customary closing conditions.
According to Sosland Publishing’s 2013 Grain & Milling Annual, Ardent Mills would have combined daily U.S. wheat and durum flour capacity of 545,600 cwts, equating to approximately 34% of the total U.S. wheat and durum flour capacity of 1,598,261 cwts.