CHICAGO (Reuters) - Bartlett and Company, which says it is a top exporter of U.S. grain to Mexico, will merge with logistics provider Savage Companies, the firms said on Wednesday, in the latest round of consolidation to hit the struggling agriculture sector.
Officials for Missouri-based Bartlett and Utah-based Savage declined to release financial terms of the deal, which they expect to close in August.
The merger, once finalized, will create a new business named Savage Enterprises, according to the privately held companies. The venture will be led by Savage Chief Executive Kirk Aubry and include Bartlett’s grain and milling businesses.
Excluded from the deal are Bartlett’s U.S. cattle feedlots, which the company says have a capacity for 100,000 animals in Kansas and Texas. Bartlett is exploring a sale for the operations, according to Savage, joining grain trader Cargill Inc [CARG.UL] and others in exiting the business.
Throughout the agriculture supply chain, grain companies and farmers alike remain under pressure from low crop prices, following years of massive harvests of staples such as corn, wheat and soybeans. Businesses big and small in recent years have rushed to merge, establish joint ventures or acquire rivals in a bid to cut costs and stay competitive.
Bartlett has long been known as a mid-sized, family-owned grain buyer in the United States, although it is much smaller than competitors Archer Daniels Midland Co (ADM.N) and Cargill.
Bartlett controlled the 20th largest U.S. grain storage network last year, with a capacity of 67.76 million bushels, according to Milling & Baking News, an industry publication. In comparison, ADM’s storage capacity was 468.6 million bushels.
“Partnering with Savage makes sense logistically and strategically,” said Bartlett CEO Bill Fellows.
Savage Companies was established in 1946 and has more than 4,000 employees in North America and Saudi Arabia. It provides transportation and logistics services for oil refineries and other businesses.
Savage is expanding in Mexico and expects to benefit from Bartlett’s business networks there, spokesman Jeff Hymas said.
The combined company will also look into adapting some of Savage’s facilities to handle products for Bartlett’s agricultural customers and some of Bartlett’s grain facilities to receive products such as oil and gas, he said.
Bartlett is more than 100 years old and has about 760 employees working in 11 U.S. states and Mexico, according to its website.
Such family-owned grain companies have been targeted for takeovers, said Chris Hurt, an agricultural economist at Purdue University.
“There aren’t many independents that are left,” he said.
Reporting by Tom Polansek; editing by Diane Craft, Bill Trott and Richard Chang