Ingredion Incorporated (NYSE: INGR), a leading global provider of ingredient solutions to diversified industries, announced that it has entered into a definitive agreement to acquire Penford Corporation (NASDAQ: PENX), a U.S.-based leader in specialty ingredients for food and non-food applications.

The acquisition has been approved by the boards of directors of both companies. It is subject to approval by Penford’s shareholders and regulators as well as to other customary closing conditions and could close as early as the end of the year. Ingredion expects to fund the approximately $340 million cash transaction with available cash and funds available under existing credit facilities.

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

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

A leader in specialty ingredients, Penford had net sales of $467 million in fiscal year 2013. The company supplies a broad 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. Its headquarters are based in Centennial (Denver area), Colorado.

"We are confident that this acquisition will create long-term value for our shareholders," Gordon said. The transaction is expected to generate annual cost synergies of at least $20 million, primarily from efficiencies in the areas of manufacturing, procurement, logistics and general and administrative functions. "We will move quickly to integrate the businesses, attain synergy savings and provide a broader offering of higher-value specialty products to our customers around the world," Gordon added.