The acquisition by NL Grease must be approved by a bankruptcy court, which is scheduled to consider the deal next week. Terms of the sale were not disclosed. Nor-Lakes will manage the plant, and NL is finalizing a long-term agreement for the plant to continue supplying CHS Cooperatives, which markets under the Cenex brand.
Nor-Lakes President James A. Taglia called the 65,000-square-foot facility a good pickup, despite the fact that U.S. grease sales have been declining for years.
This helps us grow at a time when economic conditions obviously make it difficult to grow, Taglia said. We believe there are going to be further consolidations in the grease market, but we are committed to the market and we want to be one of the ones left standing.
Taglia said the acquisition will also expand Nor-Lakes geographic reach, since the Farmland plant is located approximately 400 miles south of Nor-Lakes’ existing oil and grease plant in Hugo, Minn. Nor-Lakes manufactures and distributes greases and other automotive and industrial lubricants, serving primarily the upper Midwest.
Farmland Industries is part of Farmland Cooperative System, the largest farmer-owned cooperative in North America. The cooperative, which has interests in food, fertilizer, petroleum, grain and animal feed businesses, has been in Chapter 11 bankruptcy since May 31.
The Kansas City plant was formerly part of the Farmland-CHS joint venture, Country Energy, which CHS bought out in 2001. The transaction initially included the grease plant, but Farmland ended up retaining ownership and entering an exclusive supply contract.