Darling to acquire Griffin Industries

By Erin Voegele | October 25, 2010
Posted Nov. 10, 2010

On Nov. 9, Darling International Inc. announced its board of directors has unanimously approved a merger agreement to acquire Griffin Industries Inc., a provider of value-added rendering and cooking oil recycling services. Under the merger agreement, Darling will acquire Griffin Industries for approximately $840 million in cash and stock. Griffin Industries' holdings currently include 12 rendering plants and one biodiesel production facility.

"Our combined companies will make us the leading independent renderer, bakery products recycler, used cooking oil recycler and grease trap maintenance provider in the United States," said Darling Chairman and CEO Randall Stuewe. "Specifically, the combination makes sense because it provides for a more diversified supply of raw material, the leading position in bakery recycling business, completion of Darling's national footprint, increased feedstock supply for our potential green diesel venture, and the ability to transfer best practices between two industry leaders."

During a conference call to discuss the merger, Stuewe specifically spoke about how the acquisition will benefit Darling's green diesel project. "Our combination effectively grows our biofuel feedstock availability and improves our capabilities to serve our green diesel venture previously announced with Valero," he said.

The green diesel project was initially announced by Darling in September 2009. At that time, the company said it was seeking to form a joint venture with a subsidiary of Valero Energy Corp. to develop a 135 MMgy renewable diesel facility adjacent to an existing Valero refinery. As announced in 2009, the facility would convert waste grease supplied by Darling into renewable diesel. Darling and Valero also announced the two companies are jointly seeking a loan guarantee from the U.S. DOE for the proposed project.

Stuewe offered a brief update on the project when he announced the pending Griffin Industries acquisition. "We've made a lot of progress with Valero," he said, noting that engineering data, cost estimates, and other necessary documentation has been submitted to the DOE for review. "The Department of Energy is aware, or will be aware of the transaction this morning, and we're hopeful that we can continue to move forward on favorable terms with the Department of Energy," Stuewe continued. "Valero has been made aware of the transaction, [and] understands that this actually positions the company better. We're a stronger, larger company than we were before, and as we say-our bucket of fat to make the fuel has just grown again by 50 percent."

Under the terms of the agreement formed for the acquisition of Griffin, Darling will pay Griffin's shareholders an aggregate purchase price of $840 million, of which $740 million is payable in cash and approximately $100 million is payable in Darling common stock. The transaction is anticipated to close by mid-December.
 
 
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