St. Louis-based agtech firm Benson Hill (NYSE: BHIL) said Tuesday it has acquired an Iowa-based manufacturer of food-grade soy products.
Benson Hill said it paid about $102 million, financed through a new debt facility, for ZFS Creston LLC, a manufacturer of white flake and soy flour in southwest Iowa. ZFS' Creston, Iowa, facility is "geographically complementary" to a soy crushing facility in Seymour, Indiana, that Benson Hill acquired last year, officials said.
The investment is a final step in Benson Hill's ability to convert its proprietary soybeans into value-added soy protein ingredients for the underserved human and pet food categories, officials said.
Founded in 2012, Benson Hill, which describes itself as a "food tech company," has developed technology that uses data science, artificial intelligence and machine learning to help improve crop varieties with better accuracy, nutritional value and sustainability than traditional breeding methods. It has placed a focus on developing crops and ingredients for the fast-growing plant-based foods market.
"The acquisition of ZFS Creston, combined with our proprietary Ultra-High Protein soybean varieties, positions Benson Hill to deliver a portfolio of improved ingredients as an innovative unlock to bottlenecks in the rapidly growing but capacity-constrained plant-based movement," Benson Hill CEO Matt Crisp said in a statement. "This acquisition advances our integrated business model as a more efficient route to market with a smaller footprint that better aligns with consumer preferences, enabling us to harness the genetic potential of plants and help scale the growth of plant-based markets."
Benson Hill officials said in a release that "exploding demand" for soy-based protein ingredients is outpacing supply, which suggests the need to build more concentrate and isolate processing facilities, an expensive and lengthy process. "Benson Hill's technology and integrated approach increases protein expression in the soybean plant itself, so that the need for additional processing is reduced," officials said. The addition of ZFS Creston's capacity will enable Benson Hill to "immediately deliver a portfolio of better-from-the-beginning non-GMO ingredients that are less processed, more sustainable, identity-preserved, traceable and domestically sourced," according to the company.
ZFS Creston's operation can produce soy meal and oil, as well as food-grade soy white flake, flour and grits, which can be marketed as ingredients or used as raw material to produce concentrates, isolates and textured protein products, officials said. Buying ZFS' soy white flake production capacity instead of making capital expenditures to build it, allows Benson Hill to "immediately" offer more sustainable ingredients in the human food market, including plant-based meat, meat extension, bakery, cereal and snack, fermentation and the pet food market, officials said.
"The Creston operation is expected to accelerate commercialization through the immediate ability to produce our ingredient portfolio," Bruce Bennett, pesident of ingredients at Benson Hill, said in a statement. "The investment also enables deeper insight to customer preferences as we deliver much-needed innovation in other high-value food ingredients in the future. ZFS Creston is an established protein supplier with a respected and knowledgeable team on-site."
In relation to the ZFS Creston acquisition, Benson Hill said it secured a $100 million committed debt facility, with potential access to an incremental $20 million. The financing was led by Avenue Capital Group, which includes the Avenue Sustainable Solutions Fund, Avenue Venture Opportunities Fund and other Avenue Global Funds. Benson Hill said it used $80 million of the new facility to finance the ZFS acquisition, covering the rest of the purchase price with cash on hand and about $5 million of seller financing.
Benson Hill officials said the ZFS Creston soy processing facility and food ingredients business is expected to contribute positive adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), and will boost Benson Hill's ingredients segment revenue. A growing proportion of revenues generated at the Creston facility will, over time, come from the processing and sale of Benson Hill's proprietary soy ingredients combined with continuing a portion of Creston's existing revenue sources, the company said.
Benson Hill reported a third-quarter 2021 net loss of $34.3 million on revenue of $32 million. That compares with a net loss of $16.9 million on revenue of $28.2 million in the third quarter of 2020. The St. Louis-based startup went public in September 2021 through a merger with a special-purpose acquisition company (SPAC).
