WASHINGTON, D.C., U.S. — The Department of Justice (DOJ) on May 20 said it has reached an agreement under which it will propose that ConAgra Foods Inc., Cargill and CHS Inc. would be allowed to combine their flour milling assets in a joint venture to be known as Ardent Mills.
The agreement requires the companies to divest four of their 44 flour mills. The four mills to be sold are ConAgra mills in Oakland, California; Saginaw, Texas; and New Prague, Minnesota.; and a Cargill mill in Los Angeles, California. ConAgra and Horizon Milling (an existing milling joint venture of Cargill and CHS) first announced plans in February to sell the four mills in a bid to secure government approval to complete the Ardent deal. In April, the companies said they had reached an agreement with Miller Milling Co., a division of Japan’s Nisshin Seifun Group, under which Miller will acquire the four mills.
With the announcement, the companies said all needed regulatory clearances have been secured and that the transaction creating Ardent is expected to close on or about May 29. The companies said the sale of the four mills to Miller Milling is expected to be completed by that date.
The proposed settlement will be published in the Federal Register, as required by the Antitrust Procedures and Penalties Act (known as the Tunney Act).
“Any person may submit written comments concerning this proposed settlement during a 60-day comment period to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, D.C. 20530,” the DOJ said. “At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the proposed settlement upon a finding that it is in the public interest.”
The Justice Department said it was assisted by the California Attorney General in its investigation.
Specifically, the Justice Department said without the divestures, hard wheat flour prices would be higher in California, Texas and the Upper Midwest.
The DOJ defined hard wheat flour as flour with “high gluten content,” “suited for baking bread, rolls, bagels, pizza dough and similar hearty baked goods.”
“Soft wheat flour, which has low gluten content, is well suited for baked goods that are lighter and flakier, such as cakes, cookies and crackers,” the DOJ. said. “Both types of flour are made and sold by flour millers — including ConAgra Mills and Horizon Milling — to industrial bakers, food processors, food service companies, distributors and retail sellers of flour for home use.”
The Justice Department said Miller Milling, the acquiring company, “has only a minimal presence in the regions of concern; its acquisition of the divestiture mills will create a substantial, independent and economically viable competitor in each relevant market. The proposed settlement also prohibits the companies from exchanging information related to wheat purchases or use by customers to which the companies have sold wheat.”
“The new company is expected to have a presence in downtown Denver starting in 2014,” the companies said. “In addition to its headquarters, Ardent Mills will operate satellite offices in Omaha, Nebraska, and Minneapolis, Minnesota.”