Cargill Purchasing Degussa's Food Ingredients Ops

MINNEAPOLIS--Cargill announced it reached an agreement with Dusseldorf, Germany-based Degussa AG to purchase the company's entire food ingredients operation. The $670 million transaction is contingent on the approval of German regulatory authorities and the Degussa board.

"This agreement marks a very significant step in Cargill's strategy of becoming a leading provider of specialty ingredients and ingredient systems to food and beverage companies globally," said Warren Staley, chairman and chief executive officer at Cargill. The acquisition is the largest since Cargill picked up the majority stake in Cerestar in a $400 million+ deal in 2002.

Degussa put its food ingredients businesses on the block in mid-2004, focusing on its pharmaceutical and industrial applications. The company sold its Fruit Systems activities in February 2005 to a private equity firm, which is now operating the business as Sweet Ovations. The Cargill acquisition includes the flavors and texturants business lines, as well as a portion of Degussa's BioActives business. According to Cargill, a portion of the BioActives business related to the food industry was included in the acquisition, while ingredients outside of that area will be retained by Degussa. Inquiries to Degussa's U.S. office for clarification on how the BioActives business is being split were referred to the company's German headquarters, which had not responded at press time.

According to Lori Johnson, director of corporate communication with Cargill, the company believes the business units are complementary to Cargill's existing operations; however, there has been no definitive word on the structure of the new merged operations, nor how the acquisition will affect current Degussa business locations and personnel.