LONDON—Associated British Foods has joined forces with ADM to manufacture, market and distribute packaged oil products in the US and Canada. ABF and ADM will each hold a 50% share in the joint venture.
The venture, Stratas Foods, will serve the foodservice, specialty food ingredient and retail private label bottled oil markets. It is expected to produce 2.5 billion pounds of oil in its first full year of operation with revenue of some $1.4 billion. Its broad portfolio of products includes vegetable oil, shortening, margarine and pan spray, and its foodservice brands include Whirl and Frymax.
In exchange for each of their 50% shareholdings, ABF is contributing $38m of assets from its oils business, primarily in the form of trademarks, while ADM is contributing packaging equipment at four of its facilities in the US. The business contributed by ACH generated operating profit of $20m for the year ended 15 September 2007. The joint venture will be headquartered in Memphis, Tennessee.
The remaining ACH business will be focused on its retail consumer brands which include Mazola corn oil, Argo corn starch, Karo corn syrup, Fleischmann's yeast and its spice brands in North America. In Mexico it mainly includes Capullo vegetable oil and Inca shortening. Brands are now expected to account for virtually all of ACH's revenue compared to only half before the formation of the joint venture.
