Ingredion Inc., Westchester, IL, a global provider of ingredient solutions to diversified industries, announced today that it has entered into a definitive agreement to acquire Penford Corp., Centennial, CO, a U.S.-based provider of specialty ingredients for food and nonfood applications.

The acquisition has been approved by the boards of directors of both companies. It is subject to approval by Penford’s shareholders and regulators as well as to other customary closing conditions and could close as early as the end of the year. Ingredion expects to fund the approximately $340 million cash transaction with available cash and funds available under existing credit facilities.

“This acquisition is another step in executing our strategic blueprint for growth,” says Ilene Gordon, Ingredion chairman and CEO. “It expands our higher-value specialty portfolio, establishes manufacturing of specialty potato starches in North America and builds our presence in nature-based hydrocolloid ingredients. Penford’s range of products addresses growing consumer trends, including nutrition, gluten-free, food textures and sustainable green solutions. The added capabilities will further enhance our efforts to deliver new, value-added solutions to the marketplace.”

Thomas Malkoski, president and CEO of Penford, adds, “This is a tremendous opportunity to combine Penford’s and Ingredion’s complementary product portfolios and capabilities. Ingredion is a recognized innovator in food ingredients and sustainable green solutions. The expanded portfolio and geographic reach of the combined company will enable new and exciting solutions for their customers and ours.”

A leader in specialty ingredients, Penford had net sales of $467 million in fiscal year 2013. The company supplies a broad range of texture solutions for food, including customized combinations of texture ingredients, with an emphasis on potato starches. Penford’s starch-based products for nonfood applications include sustainable, nature-based solutions designed to replace synthetic ingredients.

With approximately 445 employees, Penford operates six plants in the U.S., all of which make specialty starches.

The transaction is expected to generate annual cost synergies of at least $20 million, primarily from efficiencies in the areas of manufacturing, procurement, logistics and general and administrative functions.