ARDEN HILLS, Minn. — The agricultural cooperative Land O'Lakes Inc. is buying Purina Mills Inc., the nation's largest feed company, for about $230 million.
Under the deal announced Monday, Land O'Lakes will pay $23 per share in cash for each of Purina Mills' 10 million shares of common stock.
Purina Mills shares climbed 15.1 percent, or $2.91 a share, to $22.21 in early dealings on the NASDAQ Stock Market after the deal was announced.
St. Louis-based Purina Mills, which makes Chow-brand animal feeds, will become part of Land O'Lakes Farmland Feed LLC following the acquisition.
Land O'Lakes is a national farmer-owned food and agricultural cooperative, with annual sales approaching $6 billion.
The Purina Mills product lines, brands, nationwide dealer network and red-and-white checkerboard logo will be maintained, said Jack Gherty, president and chief executive officer of Land O'Lakes. Purina Mills will continue to be based in St. Louis, with its own sales and marketing team.
Gherty said the deal will bring together two well-recognized brands in different product categories, and help both companies compete nationally in the consolidating feed industry.
Brad Kerbs, chief executive of Purina Mills, said the proposed acquisition "will create a more competitive national feed system."
The deal is subject to approval by the shareholders of Purina Mills. Major shareholders include GSCP Recovery Inc., which owns about 28 percent of the company and is supporting the deal. Cargill Inc. last month acquired an 8.6 percent stake.
Purina Mills is a spinoff of St. Louis-based Ralston Purina, which agreed to be bought by Geneva-based Nestle SA for $11 billion earlier this year. Purina Mills was Ralston's domestic feed business.