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ConAgra Foods, Cargill, CHS Said to Face Multi-State Probe

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WASHINGTONAbout a dozen states are said to have joined the U.S. Department of Justice (DOJ) in investigating a proposed plan by ConAgra Foods Inc., Cargill Inc. and CHS, Inc., to form the new flour milling joint venture that would serve the baking and food industries. 

Two sources told Reuters that Oklahoma's attorney general is leading the multi-state probe along with the DOJ's antitrust division into the plan by ConAgra Foods, Cargill and CHS to form the new company. Diane Clay, a spokeswoman for Oklahoma's Office of the Attorney General, today declined to comment on the Reuters report.

The new company, Ardent Mills, would bring together ConAgra Mills and Horizon Milling, a joint venture that Cargill and CHS formed 11 years ago. The flour milling businesses posted combined revenues of $4.3 billion in the fiscal year ending in May 2012.

Gina Talamona, a spokeswoman for the DOJ, today confirmed earlier news reports that the agency's antitrust division is investigating the proposed joint venture. She declined further comment.

The antitrust division often examines mergers, joint ventures and related deals to determine how they will impact competition and affect prices and consumer choice. If it finds a deal is anticompetitive, DOJ can file a lawsuit to block the agreement as it recently did in response to Anheuser-Busch InBev's proposed acquisition of Grupo Modelo.

Becky Niiya, a spokeswoman for Omaha, Neb.-based ConAgra, said it is "confident" in the agreement and "continue to believe that it will enhance competition and customer and consumer choice."

Lori Fligge, a spokeswoman for Minneapolis-based Cargill, said the multi-state group of attorneys general has not contacted the company.

"We firmly believe in the merits of the Ardent Mills transaction and would welcome the opportunity to talk with the Attorneys General group about how we believe it will benefit suppliers, customers and  consumers. Flour milling is a highly competitive business throughout North America, and Ardent Mills will have substantial competition when the transaction is completed," she said in a statement.

Lani Jordan, a spokeswoman with Inver Grove Heights, Minn.-based CHS, said the company couldn't "comment specifically on Department of Justice activity". But she noted the new joint venture will "add value for our producer and co-op owners in what will continue to be a highly competitive industry."

Representatives for the state attorneys general in Nebraska and Minnesota did not immediately respond to emailed requests on whether they are involved in an investigation into the agreement between ConAgra and Horizon Milling.

Under the deal, Ardent Mills will operate as an independent joint venture of its three parent companies. The JV would be comprised of 44 flour mills, three bakery mix facilities and a specialty baker, with ConAgra Foods and Cargill each owning a 44% stake in the business. CHS would own the remaining 12% interest.

Antitrust review could thwart or delay closing of the deal, which the companies previously anticipated would occur later this year.

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