Lawsuit challenges Penford deal

CEDAR RAPIDS - A class-action lawsuit has been filed by shareholders against the board of directors of Penford Corp. contending they did not adequately shop the company to get a higher price before accepting an offer from Ingredion Inc.

A complaint filed in Colorado federal court alleges breaches of fiduciary duty and other violations of state law regarding the $340 million, $19-per-share deal announced Oct. 15.

Penford, a Centennial, Colo., specialty ingredients company, operates its largest manufacturing facility in southwest Cedar Rapids. The boards of directors of both companies have approved the acquisition, which is subject to approval by Penford's shareholders and regulators, as well as other customary closing conditions.

Ingredion, based in Westchester, Ill., is an ingredients provider specializing in nature-based sweeteners, starches and nutrition ingredients.

Penford, which had net sales of $467 million in fiscal 2013, has six plants in the United States, all of which make specialty starches.

The Cedar Rapids plant at 1001 First St. SW, employs 242 people. The more than 100-year-old facility has been expanded in recent years to add the production of ethanol.

Ingredion has said the merger is expected to generate annual cost savings of at least $20 million - primarily from efficiencies in manufacturing, procurement, general and administrative functions and logistics.

Chelsea Keenan of The Gazette contributed to this story.