Milner Milling/Pendleton Flour Mills Become Grain Craft: Case Study

Industry/Sector: Food Manufacturing

Deal Type: Buy-side M&A

FourBridges Team: Andy Stockett, Chris Rowe

Client and Industry Profile: Milner Milling/Pendleton Flour Mills (“Milner”) – now operating under the name Grain Craft – was a privately owned flour milling company, producing a variety of bulk and bag flour to major food companies across the country.  Milner Milling primarily served customers across the Southeast, while Pendleton operated facilities west of the Mississippi River.

Historically, the flour industry has beencomposed of a relatively small number of family-owned companies and large corporations. Given the highly stable and profitable characteristics of the business, ownership of these companies rarely change hands.

Client Objectives: Milner executives had approached FourBridges previously to explore acquisition strategies, including targets outside the core flour milling segment. Three potential opportunities appeared on the market, including Cereal Food Processors (CFP), which was the largest independent milling company in the U.S. at the time. Based in Kansas City, CFP had milling facilities that were a strategic fit with Milner’s footprint. Having never completed an acquisition of this size, Milner’s executive team engaged FourBridges to initiate and negotiate the transaction.

The Challenge: Because large flour mills are seldom for sale, Milner was competing with many aggressive suitors to purchase CFP. The investment banking firm representing CFP (William Blair and Co. of Chicago) was conducting a fairly broad auction with many potential bidders. To become the ultimate buyer, Milner would have to stand out from other bidders, including large private equity funds, domestic strategic buyers and foreign corporations.

The Process: FourBridges advised management and shareholders that in order to successfully “win” the auction, Milner’s strategy should be to present an offer that 1) valued CFP fairly versus other similar transactions; 2) included a post-transaction structure and operating philosophy similar to that of the current owners; and 3) was fully financed and had no contingencies.

FourBridges helped Milner’s management to secure necessary funding before submitting an offer, which ensured Milner's bid was not only competitive monetarily, but with no financing contingency. In addition to contacting Milner’s current lending relationships, FourBridges advised engaging other financing sources to ensure financing was obtained and at the best terms possible. The offer Milner eventually submitted highlighted the fact that Milner's ownership was mindful of CFP's history as a family-owned entity, and was well equipped to preserve its legacy and operate with similar cultural philosophies. The terms provided an attractive purchase price, no financing contingencies, no due diligence contingencies and the ability to close the transaction quickly.

The Result: By implementing an aggressive and creative acquisition strategy, Milner’s bid was accepted over several others, and the transaction closed after a 30-day regulatory review.  Contacting a broad number of lenders enabled the company to obtain financing on extremely attractive terms.  Following the acquisition, Milner Milling/Pendleton Flour Mills and CFP began operating as Grain Craft, which is now the third-largest flour milling company in the nation.


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