The Citrico deal by Cargill sends a very clear message that they are in the hydrocolloid world for the long term and intend to become a top rank industry player. The world of hydrocolloids has changed beyond all recognition in the past few years. Danisco are one of the few top players still in the business with a history longer than a few years. More and more of the hydrocolloids world is now owned by companies with experience in commodity products rather than speciality chemicals. The new leader board in hydrocolloids includes Huber and Cargill, both who have bought their way into the business relatively recently. The next question is where will the Degussa hydrocolloids business end up? My prediction is that it will be another food based company with a history in bulk commodity products looking to move up to higher margin business or a private equity houses as demonstrated by the recent acquisition of Hansens.
The Citrico plant in Malchin as a capacity of 4,500 tonnes and is believed to have cost €46.7M. production is also believed to be exclusively high methoxy pectin although there where undoubtably plans for a move into the low methoxy market. This deal puts Cargill at number three in the pectin world after CP Kelco and Herbstreith. They will need to develop the low methoxy business further as this is where the higher margins can be found.
In September 2004 Citrico International went into liquidation, while the firm’s German-based production plant and business situated in Malchin remained working. Cargill’s acquisition includes both businesses.
The announcement from Cargill reads
Cargill has completed the acquisition of the global pectin business of Citrico, a manufacturer and international supplier of citrus products for the food, beverage and pharmaceutical industries.
Citrico’s pectin production and sales operations in Malchin, Germany, will become part of Cargills texturising business in Germany. Citrico’s pectin business has a workforce of over 120 employees worldwide.
"By integrating Citrico’s pectin business with our specialty starches, xanthan gum and soy protein businesses, the company will be better positioned to deliver unique, high value solutions to food and beverage companies worldwide," says Ralph Appel, head of Cargill’s global texturising business. "The Citrico team further enhances our existing staff of technical specialists dedicated to developing innovative value-added texturising solutions and we are happy to welcome them on board."