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Green Plains Buys Major Vinegar Processor | KRVN Radio

Green Plains Buys Major Vinegar Processor

OMAHA (DTN) — An Omaha-based ethanol and processing company is getting into the vinegar industry.

Green Plains Inc. announced Monday it has acquired California-based Fleischmann’s Vinegar Co. for $250 million. Fleischmann’s is considered the world’s largest manufacturer and marketer of food-grade industrial vinegar.

Todd Becker, president and chief executive officer for Green Plains, said in the conference call with investors on Monday that the Fleischmann’s acquisition fits into Green Plains’ efforts to diversify into adjacent and related industries for ethanol production, particularly industries that “reduce cyclical risks” for the company. The strategic rationale for both companies is that the primary raw ingredient in vinegar production is food-grade ethanol.

“It was very exciting to find a company that uses food-grade ethanol right out the back of an ethanol plant,” Becker said.

Fleischmann’s has seven manufacturing facilities around the country and Canada with a headquarters office in California. The company focuses on food production with straight vinegar products, condiments, dressings and cooking wines, as well as various industrial applications, including cleaning products.

Fleischmann’s also has moved into areas such as antimicrobial production for the meat-processing industry. Fleischmann’s also produces a bio-herbicide and a liquid additive to cattle feed.

The purchase comes just a week after Green Plains closed the deal on buying three ethanol plants through the bankruptcy of Spain-based Abengoa. Green Plains bought ethanol plants in Illinois, Indian and Nebraska for $237 million.

While Green Plains now has 17 ethanol plants producing 1.5 billion of ethanol and 1.4 million tons of distilled grains, Becker noted the company also is increasingly getting into various food product such as exporting food-grade corn oil.

Becker noted vinegar is largely a “non-cyclical end market” with stable margins. He later referred to the vinegar market as “recession proof.”

On the conference call, the company executives indicated more efforts to convert into food-grade ethanol products, as well as tap into food trends such as organic, non-GMO and all natural.

The sale was financed with $135 million in debt and balance paid in cash.

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