Canadian company offers to buy Dakota Growers PastaViterra Inc. is offering to buy Dakota Growers Pasta Co. for $240 million, which would put the Canadian food processing and grain handling company into the pasta business.
By: By Dale Wetzel, The Associated Press, The Jamestown Sun
BISMARCK — Viterra Inc. is offering to buy Dakota Growers Pasta Co. for $240 million, which would put the Canadian food processing and grain handling company into the pasta business.
Viterra’s board of directors endorsed the offer Wednesday, the company said in a statement. The board of Dakota Growers, which is based in the central North Dakota community of Carrington, approved it Tuesday, said its chairman, Lt. Gov. Jack Dalrymple.
Tim Dodd, Dakota Growers president and CEO, said he didn’t expect changes in the company’s operations.
“There won’t be any lost jobs or anything like that,” Dodd said.
Dakota Growers, the nation’s third-largest pasta maker, operates manufacturing plants in Carrington and New Hope, Minn., Dodd said. Dakota Growers Pasta Company employs 250 people in Carrington and 198 people in New Hope.
Viterra, which is based in Calgary, Alberta, Canada, has operations in the western United States, Australia and New Zealand. It is financially robust, and is paying cash to acquire Dakota Growers, Dodd said.
“They have a lot of cash available,” he said. “They have the capital to fund (expansion) projects. ... If the opportunity arises to continue to grow our business, they’ve got the financial strength to back us on it.”
Dakota Growers has about 1,200 shareholders. Its stock is thinly traded and not listed on any exchange. Viterra is offering $18.28 per share for the company’s common stock and 10 cents a share for a separate class of preferred stock that gives holders the right to sell grain to Dakota Growers.
Dakota Growers’ shareholders will receive information about Viterra’s offer within two weeks, the companies said in separate statements Wednesday. The Canadian company is forming a subsidiary to buy Dakota Growers’ stock and merge the two companies.
Dakota Growers was founded as a cooperative, owned by farmer members who supplied durum — a wheat variety used to make pasta — for its factory. The company began producing pasta in 1994.
In 2002, the company’s members voted to convert Dakota Growers to a corporate ownership structure and allow anyone to buy shares. Previously, shareholders had to promise to supply grain for the company’s operations, which made it impractical for nonfarmers to own shares.
Dakota Growers’ board members and officers own nearly 30 percent of the company’s shares, Securities and Exchange Commission filings say, which makes it likely the deal will be consummated.
The company supplies pasta as an ingredient for prepared meals and to restaurants and cafeterias. It supplies packaged private-label pasta and its own Dakota Growers brand to grocers and club stores. It also has a low-carbohydrate pasta brand called Dreamfields.
In its last complete budget year, Dakota Growers had $297.4 million in revenues, SEC filings say. Its net income was $17.7 million, almost double the previous year’s $9.3 million.
“This is an opportunity that has come about because of the fact that we have had some very good years in the pasta business recently,” Dalrymple said. “We feel that the value of the company is as high as it has ever been.”
(Jamestown Sun staff contributed to this story)