US ingredients firm Corn Products International said its acquisition of National Starch will allow it to serve its global customers better, particularly in Europe.
Announcing the US$1bn acquisition of the speciality starch ingredients business this morning (21 June), Corn Products said the deal will create a business generating $5bn in annual sales, and provide it with access to new markets including Europe.
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Speaking on a conference call, Ilene Gordon, chairman, president and CEO of Corn Products, said the purchase will allow it to serve customers in Eastern and Western Europe that are expanding their businesses.
“Being positioned in Europe helps us better serve those customers,” Gordon said. “It really helps to be able to sit down with those companies, and there are some very large ones now, and say to them that we will help you design your products in the texture that you want and we can do that globally and serve you globally, so I think that really does give us an advantage.”
Outside of Europe, Gordon said that Asia-Pacific and Australia also provided “exciting opportunities” for the firm.
“National Starch expands our geographic reach adding to our position in Asia Pacific, in the China food market and adding to our presence in Australia and New Zealand,” she added. “This is a strategically compelling acquisition that will increase our presence in global priority areas. While North America will continue to be our largest geographic market, sales in the rest of the world will be more valued.”
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By GlobalDataJohn berry, vice president of investor relations, told analysts the company expects the transaction to result in at least US$50m in cost synergies.
“The acquisition will represent a major step forward in our ingredient strategy and transform into us into a $5bn global ingredient company.
“After we close on the transaction we will be moving very quickly to integrate National Starch, to leverage selling skills and marketing expertise and to accelerate our go to market strategy in North America and Asia pacific.”
On a cash basis, the transaction is expected to be accretive by the end of 2011, and is expected to close in the third quarter of this year.
