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CONTACTS: Jeffrey T. Cook For media inquiries:
President and CEO Stephen Davis
Penford Corporation MWW/Savitt
425-462-6000 206-505-8380
[email protected] [email protected]
FOR IMMEDIATE RELEASE
PENFORD CORPORATION AND CARGILL TO FORM $200 MILLION JOINT VENTURE
COMBINING INDUSTRIAL STARCH BUSINESSES
BELLEVUE, WASH., AND MINNEAPOLIS, JAN. 17, 2001 - Penford Corporation (Nasdaq:
PENX) and Cargill today announced their intent to form a joint venture combining
their industrial starch businesses in North America. The companies will create
an enhanced specialty-starch ingredient manufacturing and distribution business,
with estimated annual sales of about $200 million focusing primarily on the
paper and textile industries. The joint venture is anticipated to generate
significant cost-efficiencies.
The joint venture will combine Cargill's operations know-how, broad resource
base, and reputation for quality and integrity with Penford's capabilities in
research and development, natural science technology, and customer service. The
joint venture also combines two highly-talented workforces known throughout the
industry for technical knowledge, depth of experience and problem-solving
skills. Terms were not disclosed and any final agreement is subject to various
approvals.
The companies anticipate creating a limited liability corporation (LLC) with
Penford as managing partner. The joint venture is expected to create multiple
plant efficiencies by utilizing both companies' Cedar Rapids industrial starch
facilities, as well as a Cargill facility in Memphis. An additional Cargill site
in Dayton, Ohio, will discontinue industrial starch operations.
-more-
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PENFORD CORPORATION AND CARGILL TO FORM $200 MILLION JOINT VENTURE COMBINING
INDUSTRIAL STARCH BUSINESSES, PAGE 2
"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," said Jeffrey Cook, CEO of Penford. "Our
relationship with Cargill solidly positions us to deliver customized solutions
to our industrial customers like never before, while combining the strength and
experience of both companies' employees."
"The joint venture allows both companies to combine their intellectual assets to
develop new products," said Cargill Corporate Vice President Mike Urbanic. "It
creates a strong financial entity, while providing leading-edge processing
capabilities for the benefit of customers, giving them an exciting competitive
advantage."
Specialty industrial starches are primarily derived from corn and used in such
products as paper and cardboard. Penford's natural-based polymer systems lower
costs across virtually every phase and grade of papermaking while making the
paper stronger, smoother and enhancing its surface properties to better hold
ink. In addition, Penford's specialty starches retain more fiber in the paper,
allowing for reduced sewage treatment, making the manufacturing process cleaner.
Penford and its predecessor companies have been producing starch for the
industrial market since the early 1940s, while Cargill has been in the business
since acquiring their Cedar Rapids corn milling facility in 1967.
"By combining our operations, we can establish long-term reliability, increased
global supply and a broader product mix to customers of both companies," said
Gregory Keeley, president of Penford 's Industrial Ingredients business.
"Furthermore, the additional plant locations will mean more reliable supplies
and reduced transportation costs for our customers to help them operate more
successfully."
-more-
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PENFORD CORPORATION AND CARGILL TO FORM $200 MILLION JOINT VENTURE COMBINING
INDUSTRIAL STARCH BUSINESSES, PAGE 3
"Cargill brings core competencies to this JV in such key areas as plant
management, information technology and risk management," said Creager Simpson,
president of Cargill's North America Industrial Starch business unit. "Combined
with Penford 's strengths in product development and customer service, this
venture has the potential to become the premier industrial starch producer in
North America." Though the joint venture is expected to achieve some
administrative and management efficiencies, specific staffing levels are still
being formulated.
ABOUT PENFORD
Seattle-based Penford (www.penx.com) develops, manufactures and markets
specialty natural-based ingredient systems for various applications, including
papermaking, textiles and food products.
ABOUT CARGILL
Minneapolis-based Cargill (www.cargill.com) is an international marketer,
processor and distributor of agricultural, food, financial and industrial
products and services with 85,000 employees in 60 countries. The company
provides distinctive customer solutions in supply chain management, food
applications and health and nutrition
This report contains forward-looking statements concerning the performance and
results of Penford. There are a variety of factors which could cause actual
events or results to differ materially from those projected in the
forward-looking statements, including, without limitation, the possibility that
the joint venture will not be finalized because of the inability of the parties
to reach final agreement, regulatory or other concerns, the failure of the joint
venture to achieve anticipated synergies and cost savings, competition, the
possibility of interruption of business activities due to equipment problems,
accidents, strikes, weather or other factors; product development risk; changes
in corn and other raw material prices; changes in general economic conditions or
developments with respect to specific industries or customers affecting demand
for the joint venture's products including unfavorable shifts in product mix;
unanticipated costs, expenses or third party claims; the risk that results may
be affected by construction delays, cost overruns, technical difficulties,
nonperformance by contractors or changes in capital improvement project
requirements or specifications; interest rate and energy cost volatility;
foreign currency exchange rate fluctuations; or other unforeseen developments in
the industries in which the joint venture operates. Accordingly, there can be no
assurance that future activities or results will be as anticipated.
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