Northstar Canola Processor Acquired by CHS

Editor’s note: updated July 31st with comments from CHS.

U.S. farmer cooperative CHS Inc. has entered a deal to acquire Northstar Agri Industries and its canola processing business in northern Minnesota from PICO Holdings, Inc. for approximately $127 million.

Located less than 60 kilometres from the Canadian border at Hallock, Minnesota, the canola processing and refining facility has purchased the majority of its canola from Canadian farmers since opening in 2012. Northstar opened a delivery facility in Winkler, Manitoba in the fall of 2014.

Formally acknowledging the acquisition on July 31st, Tom Malecha, CHS vice president for processing and food ingredients, said the purchase will add value for CHS members:

“Specifically, the acquisition expands our oilseed processing platform to include canola in addition to soybeans, adds to CHS presence in Canada, expands CHS oil product offerings to global food companies, and links growers purchasing canola seed from CHS-owned retail outlets to an integrated supply chain,” he said.

Neil Juhnke, president of Northstar Agri Industries, noted “the new ownership structure adds security and many value-added opportunities for canola growers in our region.”

With capacity for 1,400 tons per day and storage for 830,000 bushels, the Northstar plant produces food-grade canola oil and meal, which was marketed by Purina Animal Nutrition, a subsidiary of Land O’Lakes. Land O’Lakes was committed to guaranteeing the sale of all of the plant’s canola oil and canola meal for a five year period.

Management of PICO Holdings, a publicly-traded investment company based in California, had been looking at alternatives for monetizing the company’s investment in its Northstar subsidiary since the fourth quarter of 2014. After adjustments and repayment of approximately $75 million in debt associated with PICO Northstar’s assets, the sale will net PICO Northstar estimated cash of $30 million, before transaction related costs.

The deal is expected to close in the third quarter of 2015. The Hallock facility will be rebranded as CHS and the 57 employees at the Hallock plant will become CHS employees. The Winkler delivery station will remain open, operating as a CHS facility.

Related: Bunge Starting Up New Canola Crush Plant in Southern Manitoba