Cargill Purchasing Degussas Food Ingredients Business

Cargill Purchasing Degussas Food Ingredients Business

MINNEAPOLISCargill announcedit reached an agreement with Dusseldorf, Germany-based Degussa AG to purchasethe companys entire food ingredients operation. The $670 million transactionis contingent on the approval of German regulatory authorities and the Degussaboard.

This agreement marks a very significant step in Cargillsstrategy of becoming a leading provider of specialty ingredients and ingredientsystems to food and beverage companies globally, said Warren Staley, chairmanand chief executive officer at Cargill (www.cargill.com). The acquisition is thelargest since Cargill picked up a majority stake in Cerestar in a $400million-plus deal in 2002.

Degussa (www.degussa.com) put its food ingredients businesseson the block in mid-2004, focusing on its pharmaceutical and industrialapplications. The company sold its Fruit Systems activities in February 2005 toa private equity firm, which is now operating the business as Sweet Ovations.The Cargill acquisition includes the flavors and texturants business lines, aswell as a portion of Degussas BioActives business. According to Cargill, aportion of the BioActives business related to the food industry was included inthe acquisition, while ingredients outside of that area will be retained byDegussa. Inquiries to Degussas U.S. office for clarification on how theBioActives business is being split were referred to the companys Germanheadquarters, which had not responded at press time.

According to Lori Johnson, director of corporate communicationwith Cargill, the company believes the business units are complementary toCargills existing operations; however, there has been no definitive word onthe structure of the new merged operations, nor how the acquisition will affectcurrent Degussa business locations and personnel.