CHICAGO (Reuters) - Grain handler Lansing Trade Group LLC is buying Interstate Commodities, marking another step in consolidation that is rippling through the U.S. agriculture sector as persistently low prices keep pressure on profits.
The combined companies could handle as much as 7 percent of the U.S. corn supply of over 15 billion bushels, according to the companies' websites.
"Both Lansing and Interstate believe the industry needs consolidation and want to be out at the forefront of a more efficient and customer-focused business model," Lansing President and Chief Executive Officer Bill Krueger said in a joint statement with Interstate on Tuesday.
Interstate last year sold two grain elevators in Ohio to Smithfield Foods Inc [SFII.UL]. Smithfield, the world's biggest pork producer, was seeking to eliminate middlemen such as grain handlers in a push to buy directly from farmers.
Glencore Agriculture Ltd, jointly owned by Glencore and two Canadian pension funds, last month approached Bunge Ltd about a merger after Bunge Chief Executive Soren Schroder said consolidation was needed.
Lansing was founded in 1922 and handles nearly 1 billion bushels of corn annually, supplying livestock farmers in the U.S., Canada and Mexico, according to its website.
Grain and energy trader The Andersons Inc owns about 39 percent of Lansing Trade Group. Lansing in 2015 also sold about 20 percent of its equity for $127.5 million in cash to New Hope Liuhe Investment Inc, a U.S. subsidiary of Chinese hog and feed company, New Hope Liuhe Co Ltd, according to a press release on its website.
Interstate Commodities handles about 200 million bushels of grain with annual sales of $2 billion at elevators and rail terminals in South Dakota, Nebraska, Illinois, Ohio and other U.S. states, according to its website.
"Lansing and Interstate have had a strong relationship for decades and believe now is the perfect time to combine our teams," Interstate Chief Executive Officer Greg Oberting said in a statement. "As a combined company, we will be able to grow both organically and through additional acquisitions."
The deal was expected to close in the third quarter. Terms were not disclosed.
Reporting by Michael Hirtzer; Editing by Cynthia Osterman