Australasian food group Goodman Fielder ended months of speculation on Friday by selling its flour milling and mixing business to GrainCorp and US grains giant Cargill for A$200 million (€110 million).
Goodman Fielder chief executive Tom Park said the snacks and cereal maker had signed an unconditional agreement for the sale, which was in line with its aim of focusing on higher margin retail branded products.
"The sale ends a very competitive bidding process that has yielded a significant return to Goodman Fielder shareholders and we intend to complete the transaction by early October," Park said in a statement.
Goodman Fielder shares rallied three cents on news of the deal to close two cents higher at A$1.71, not far off its 2002 high of A$1.76, in a slightly firmer overall market.
The sale makes the GrainCorp/Cargill joint venture one of the biggest two flour millers in Australia, rivalling the privately-owned Manildra group.
Cargill is one of the world's largest flour millers, operating mills in North America, South America and Asia.
Rival bidders were seen as monopoly wheat exporter AWB and South Australian grains handler Ausbulk, though late on Friday competition watchdog the Australian Competition and Consumer Commission said it would oppose any proposed acquisition of the flour milling operations by AWB on competition grounds.
Park said the joint venture would continue to supply Goodman Fielder with on-going security and quality of supply on competitive terms.
"A key element of the transaction is a long term suppply contract for the supply of flour-based products to Goodman Fielder," he said.
The acquisition boosts GrainCorp's drive to diversify its operations from grain handling and gives the US-owned Cargill group a much greater foothold in Australia than ever before.
GrainCorp and Cargill already work together through two jointly owned grain centres in New South Wales.
GrainCorp managing director Tom Keene said the joint venture combined specialisations in grain logistics, storage, handling, milling and mixing and the partners had the expertise to improve processing systems.
The acquisition had the approval of the ACCC.
Cargill Australia's chief executive officer Ralph Selwood said the acquisition would generate cost savings and add value by integrating Goodman Fielder's milling business with its own.