Cargill to Acquire Cosun's Royal Nedalco Alcohol Operations

The acquisition of Royal Nedalco is an excellent strategic fit for Cargill, complementing existing asset footprint, and a great opportunity to create value for customers, due to involvement at each stage of the wheat supply chain.

2/2/2011 --- Cargill has announced its intention to acquire Royal Nedalco's alcohol operations from its parent company, Royal Cosun.

Cargill and Nedalco - who operate plants adjacent to each other in both the Netherlands and the UK - have been business partners for many years. Cargill's wheat processing plants supply Royal Nedalco with wheat raw materials for its alcohol production process. This acquisition is therefore a natural extension of Cargill's long-standing business operations.

This deal involves Nedalco head office in Bergen op Zoom (The Netherlands), the Royal Nedalco plants in Manchester (UK), Sas van Gent (The Netherlands) and Heilbronn (Germany). The three Royal Nedalco production plants produce about 1.4 million hectolitres of high quality potable and industrial alcohol per annum and employ approximately 100 people. Royal Nedalco's technology development activities are not part of this deal.

"The acquisition of Royal Nedalco is an excellent strategic fit for Cargill, complementing our existing asset footprint, and a great opportunity to create value for our customers, due to our involvement at each stage of the wheat supply chain," says Peter van Deursen, head of Cargill's starches and sweeteners business in Europe. "Royal Nedalco is recognised as one of the market leaders in premium potable and industrial alcohol in Europe and we already supply them with raw materials for a substantial part of their alcohol production process."

Van Deursen continues: "These raw materials are part of our existing wheat processing activities, so this represents an excellent opportunity for us to enter a high value market complementary to those in which we are already present on the food, non-food and feed side. By converting these raw materials into high quality alcohol ourselves, we will add considerable value to our overall starch operations. Furthermore, this acquisition will strengthen our employee base with the addition of very qualified and motivated people who bring valuable expertise in the production and marketing of potable and industrial alcohol."

Royal Nedalco's high-quality alcohol is used in multiple industrial applications in the spirit, food, pharmaceutical, chemical and cosmetics industries. For the spirit industry, the company's alcohol is used as a superior ingredient. In the non spirit segment, the alcohol has a wide arrange of applications, from flavours and perfumes to mouthwash, disinfectants and printing ink.

Royal Nedalco's Managing Director, Ger Bemer, states the benefits to Cargill of acquiring such a highly skilled company and workforce: "The strength and expertise of the Royal Nedalco employees have resulted in genuine client relationships characterized by mutual respect. This unique position on the market, combined with Nedalco's world class factories has convinced Cargill to enter the alcohol production market. This step will provide our employees and customers with solid long-term growth opportunities under the wings of a privately held company focused on long-term value creation."

Robert P. Smith, President and CEO of Royal Cosun says: "We intend to divest our alcohol operations as they no longer form part of our core strategic focus. But we are convinced that the sale of the Royal Nedalco facilities to Cargill will provide the business and the employees with interesting long-term growth."

Completion of the acquisition is dependent upon regulatory approval, which is expected in the second quarter of 2011.