|Mark Palmquist, managing director and chief executive officer of GrainCorp.
Photo courtesy of GrainCorp.
“This transaction is consistent with our strategy to proactively manage our portfolio to improve returns,” said Mark Palmquist, managing director and chief executive officer of GrainCorp. “The interest shown by PEP to acquire full control of Allied Mills provided us with an excellent opportunity to realize the value in Allied and create balance sheet flexibility for the future.”
“Along with Cargill Australia, we have been joint investors in Allied Mills for over 15 years. We would like to thank the management and employees of Allied Mills for our successful relationship over such a long period. GrainCorp wishes Allied Mills, its customers and new owners all the best and we look forward to maintaining our positive relationship into the future.”
Allied Mills is Australia’s largest supplier of flour and bakery pre-mixes to bread stores, in-store supermarket bakeries and the industrial food service sector. The company operates seven flour mills in Queensland, New South Wales, Victoria and Western Australia.
“Over a number of years GrainCorp has been investing in a series of capital projects and as these projects are completing, our focus has been on maintaining a disciplined approach to capital management and portfolio optimization,” said Alistair Bell, group chief financial officer of GrainCorp. “This sale of an equity investment in Allied Mills creates an opportunity to realize value, reduce gearing and improve our returns. The funds of A$190 million will provide flexibility as we approach our peak gearing and remain available for other redeployment opportunities.”
GrainCorp’s share in Allied Mills was acquired from Goodman Fielder in 2002.Allied Mills will join Pinnacle Bakery & Integrated Ingredients as part of PEP’s portfolio. PEP acquired Pinnacle in May 2015, and the baked foods manufacturer makes and distributes finished baked foods such as muffins, cakes, donuts and slices, as well as frozen and unbaked products such as pastries, cookies, scones, sausage rolls, bagels and pastry shells. The company has more than 3,500 customers throughout Australasia, and is a major supplier to supermarkets, food service and bakery retailers.