US: Ceres sinks $2.8m into purchase of organic supplier
The Minnesota-based storage, handling and logistics company announced the acquisition, which was made through its wholly owned subsidiary, Riverland Ag Corp. earlier this month. It has purchased 100% of the equity of Nature’s Organic Grist, LLC.
Nature’s Organic Grist (NOG) is a supplier for organic grains and feed products including feed grains and pulses along with ancient grains and brings the skill-set needed to work with organic products, according to Ceres. The management company has facilities and logistic framework in the US and Canada.
The organic supplier was of interest because it helps expand the feed and grain types that the company manages and sells, said Kyle Egbert, CFO with Ceres. “Diversifying into other parts of agriculture is a big part of Ceres’ strategy and the acquisition of NOG came at an opportune time,” he added.
“We were looking specifically at organic and other ‘quality-conscious’ products and offerings,” he told FeedNavigator. “This is something that we had been discussing for a long time as it is complementary to many of our existing product lines and will be able to utilize our existing infrastructure.”
The acquisition is expected to expand the company’s product and services portfolios and provide an “immediate and accretive footprint” into the organic industry, he said. Ceres previously had a network of logistics centers and industry knowledge.
“We view NOG as complementary to our existing assets and fills the gaps within our expertise,” he said. “We are excited about the links between our current business and the new opportunities in rapidly growing organics space.”
The cash cost for the purchase was $2.8m, and is being funded through current working capital, Ceres said. There is a potential that there will be additional payments to NOG’s former owner depending on future performance from the business.
The acquisition included 100% of NOG’s equity, said Egbert. “This included all contracts, assets, brand equity and employees that have extensive experience in the organic space.”
However, it is not intended to cause any changes or disruption of service for that company’s current customers, he said. “NOG will continue to operate under its current names as a wholly-owned subsidiary of Ceres,” he added.
The target market for the new product lines will be in North America, he said.
“There are significant opportunities for growth in North American and with our existing infrastructure we are in a prime position to help create value for farmers and consumers alike while also supporting the growth of the organic movement in North America,” he said.
Previously, Ceres has focused on streamlining the system it uses to deliver feed grains and products, said Egbert. The new acquisition provides an opportunity to bring a similar focus to the market for organic grains and feed ingredients.
“We continue to evaluate opportunities to grow our business and create value for our customers, this will be our goal in the organic space as well,” he said.