Cargill and Penford Form Joint Venture To Combine Starch Biz

22 January 2001 00:00  [Source: ICB Americas]

Cargill Inc. and Penford Corporation will enter into a joint venture combining their industrial starch businesses in North America. The new company, which will have estimated annual sales of $200 million, will focus primarily on the paper and textile industries.

The two companies will form a limited liability corporation with Penford as managing partner. The companies expect the joint venture to create multiple plant efficiencies by using both companies' starch facilities in Cedar Rapids, Iowa, as well as a Cargill facility in Memphis, Tenn. An additional Cargill site in Dayton, Ohio, will discontinue industrial starch operations.

"Joining forces with Cargill is in line with Penford's vision and commitment to be a leading research-driven, natural science company that develops and delivers value-added ingredient systems to our customers, in this case, our industrial customers in North America," says Jeffrey Cook, CEO of Penford. "Cargill brings core competencies to this JV in such key areas as plant operations, information technology and risk management," says Creager Simpson, president of Cargill's North American starch business. "Combined with Penford's strength in product development and customer service, this joint operation has the potential to become the premier industrial starch partner in North America."

The Cargill Penford joint venture comes on the heels of another starch joint venture targeting the paper industry. Effective January 1, National Starch and Chemical Company (NSC) and the pulp and paper division of Hercules formed a marketing alliance to handle the sale of more than 300 million pounds of NSC's papermaking starch product line.

The US papermaking industry is estimated to purchase about 3 billion to 3.5 billion pounds of starch annually. The US market for industrial starches is projected to grow by 5.5 percent to reach $3.3 billion by 2004, according to Cleveland, Ohio-based Freedonia Group.

The formation of the Cargill joint venture follows Penford's $54.5-million acquisition of Starch Australasia Limited from Goodman Fielder Limited last year.

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