Cargill acquiring alcohol business of Royal Nedalco

by Josh Sosland
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WAYZATA, MINN. — Cargill has reached an agreement to acquire the alcohol operations of Royal Cosun’s subsidiary Royal Nedalco.

Based in Bergen op Zoom in The Netherlands, the acquired business includes the unit’s headquarters located there as well as plants at Manchester, U.K.; Sas van Gent in The Netherlands and Heilbronn, Germany.

Terms of the transaction were not disclosed. Completion of the deal, subject to regulatory approval, is expected in the second quarter of 2011.

Cargill already operated wheat processing plants adjacent to the Nedalco facilities in the U.K. and the Netherlands and has supplied feedstock to those plants under an agreement between the companies for several years. The acquisition would mark Cargill’s entry into the food grade alcohol business.

The three Royal Nedalco production plants distill about 1.4 million hectolitres (37 million gallons) of food grade and industrial alcohol annually and employ approximately 100 people. Royal Nedalco's technology development activities are not included in the transaction.

Royal Nedalco's alcohol is used in multiple industrial applications in the spirits, food, pharmaceutical, chemical and cosmetics industries. In the non-spirits segment, the alcohol has a wide arrange of uses, from flavors and perfumes to mouthwash, disinfectants and printing ink.

“The acquisition of Royal Nedalco is an excellent strategic fit for Cargill, complementing our existing asset footprint, and a great opportunity to create value for our customers, due to our involvement at each stage of the wheat supply chain,” said Peter van Deursen, head of Cargill’s starches and sweeteners business in Europe. “Royal Nedalco is recognized as one of the market leaders in premium potable and industrial alcohol in Europe, and we already supply them with raw materials for a substantial part of their alcohol production process.

“These raw materials are part of our existing wheat processing activities, so this represents an excellent opportunity for us to enter a high value market complementary to those in which we are already present on the food, non-food and feed side. By converting these raw materials into high quality alcohol ourselves, we will add considerable value to our overall starch operations.”

Robert P. Smith, president and chief executive officer of Royal Cosun described the alcohol business as falling outside the company’s core strategic focus.

In addition to its alcohol business, Royal Cosun is an ingredient supplier specializing in sugar, potato products and specialty ingredients, including bakery ingredients, toppings and fruit and vegetable applications. The company was established more than 100 years ago as a Dutch beet sugar cooperative and has 10,000 members, 4,500 employees and annual sales of about €1.8 billion ($2.5 billion).

In Europe, Cargill employs a workforce of 2,800 in its starches and sweeteners business, headquartered in Mechelen, Belgium. Operating 13 facilities across Europe, the business sells range of products to customers in the food, paper, cardboard, corrugating, pharmaceutical and animal feed sectors.
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