In an announcement expected to result in the creation of two major flour milling companies, Miller Milling Co., the U.S. subsidiary of Nisshin Flour Milling Inc., has reached an agreement to acquire four U.S. flour mills. Included in the asset purchase agreement are the Los Angeles flour mill of Horizon Milling L.L.C. and the Oakland, Calif.; Saginaw, Texas; and New Prague, Minn., mills of ConAgra Mills.
In addition to turning Nisshin into a top U.S. flour milling company with around 100,000 cwts of daily milling capacity, the transaction also is seen as pivotal in allowing an even larger transaction to move forward — the creation of Ardent Mills through the combination of the remaining milling operations of ConAgra Foods, Inc. and Horizon Milling L.L.C.
The four mills with a combined daily flour milling capacity of 62,500 cwts will be acquired at a price of $215 million (about 22 billion Japanese Yen). Nisshin said completion of the transaction, expected in May, is subject to U.S. regulatory approval.
ConAgra Foods, Inc. and Cargill announced in February that the four mills (out of 44 operated by the companies) would be offered for sale in an effort to address regulatory concerns in connection with the creation of a joint venture named Ardent Mills, what would be the largest milling company in the United States. Completion of the j.v., first announced in March 2013, has been delayed because of regulatory concerns.
The largest flour milling company in Japan, Nisshin for many years had a modest presence in North America, having acquired the Rogers Foods, Ltd. milling business in Canada in 1989. In 2012, Nisshin acquired Miller Milling Co., which operates flour mills in Fresno, Calif., and Winchester, Va. Those two mills currently have daily milling capacity of 36,000 cwts.
With the four additional mills, Nisshin will be poised to become the fourth largest U.S. milling company, lagging only Ardent Mills (pending completion of that transaction), ADM Milling Co. and another new business to be created when Milner Milling Co. acquires Cereal Food Processors, Inc. (a transaction announced in March, also still pending completion).
Nisshin’s acquisition of flour mills in Texas and Minnesota will give the company a broader geographic footprint in the United States beyond its current coastal state presence. It also will make Nisshin a milling heavyweight in the nation’s largest flour milling state — California. With 3 of the state’s 11flour mills and milling capacity of 36,100 cwts (according to the Grain & Milling Annual published by Sosland Publishing Co.), Nisshin will account for roughly a third of California’s daily flour milling capacity of 126,700 cwts. Ardent also will have three Golden State mills and will be still larger than Nisshin, with daily capacity of 45,500 cwts.
The broadening of its U.S. milling capabilities was cited by Nisshin as a factor contributing to its decision to purchase the mills.
“Each of the four mills (to be acquired) has unique characteristics in terms of locations as well as products manufactured, and Nisshin believes synergy can be expected with Miller Milling,” Nisshin said.