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Flour Mill Divestiture for ConAgra Joint Venture

WASHINGTON - Before they can form Ardent Mills, a flour-milling joint venture, ConAgra Foods, Cargill, CHS and Horizon Milling must divest four major flour mills, the Justice Department said Tuesday.

Such divestitures will preserve flour-milling competition in Northern California, Southern California, Northern Texas and the Upper Midwest, keeping cookie prices low in Los Angeles and other major cities, the government said.

Horizon Milling is already a joint venture between Cargill and CHS. Ardent Mills would combine that asset with ConAgra Mills, a subsidiary of ConAgra Foods.

The settlement was filed Tuesday simultaneously with a civil antitrust action in Federal Court.

An uncontested merger would inflate both hard- and soft-wheat flour prices, the Justice Department said. Whereas the gluten-rich hard wheat is well suited for bagels and pizza dough, soft-wheat flour is well suited for cakes and other baked goods. ConAgra Mills, Horizon Milling and other flour millers make and sell these products to industrial bakers, food processors, distributors and others.

"The proposed settlement requires the companies to divest to Miller Milling Company LLC, four mills: ConAgra Mills' Oakland, California; Saginaw, Texas; and New Prague, Minnesota mills; and Horizon Milling's Los Angeles mill," the Justice Department said in a statement.

Since Miller Milling's presence in the regions of concern is "minimal," its acquisition of the four aforementioned mills "will create a substantial, independent and economically viable competitor in each relevant market," the department added.

None of the companies can exchange information under the settlement related to wheat purchases or use by customers to which the companies have sold wheat.

Based in Delaware with its principal place of business in Omaha, Neb., ConAgra Foods is one of the top three flour millers in the country and operates 21 mills in the United States.

ConAgra reported revenues of $13.3 billion in 2012 with its milling subsidiary reporting revenues of $1.8 billion.

Cargill owns 76 percent of Horizon Milling, with the other 24 percent belonging to CHS.

Another top three flour miller, it is headquartered in Wayzata, Minn., and operates 20 wheat flour mills in the United States. It reported revenues of $133.8 billion in 2012.

Horizon Milling meanwhile currently operates 15 former Cargill wheat flour mills, which Cargill contributed to Horizon when it was formed in 2002. Horizon reported approximately $2.5 billion in revenues in 2012.

The Justice Department described CHS as a Delaware corporation headquartered in Inver Grove Heights, Minn. It owns five U.S. wheat flour mills, which it leases to the Horizon Milling joint venture. CHS reported revenues of $40.1 billion in 2012.

Minneapolis-based Miller Milling is a subsidiary of the Tokyo-based Nisshin Seifun Group.

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