CG&S moving toward merger with Mid-Kansas Co-op

Cooperative Grain & Supply, based in Hillsboro, is working toward a merger with Moundridge-based Mid-Kansas Cooperative Association, effective May 1.

The new organization, if approved by CG&S stockholders, will go by the name Mid-Kansas Cooperative Association and will have its headquarters in Moundridge.

In a separate action, Farmers Cooperative Elevator in Nickerson is also pursuing unification with MKC. The CG&S and MKC transaction is not dependent on the outcome of the effort by FCE.

Information about the union was circulated to CG&S stockholder in a letter dated Feb. 5.

The letter cited five reasons for unification:

  • more effective use of facilities, equipment and personnel;
  • better use of capital expenditures funds;
  • spread risk over a larger trade area;
  • better use of grain facilities and asset justification through Team Marketing Alliance, LLC;
  • better dry-fertilizer opportunities using the new unit train facility at Hutchinson Fertilizer Terminal, LLC; MKC is one-third owner of the terminal as ar two other area cooperatives.
  • an increased ability attract, hire, train, promote and retain the best and brightest employees.

The letter stated all three cooperatives “have sound balance sheets,” but future profitability may be challenging if they continue to operate independently.

“All three cooperatives believe that additional improvements in operational and capital expenditure efficiencies of facilities, equipment and personnel can be gained with unification,” according to the letter.

The merger proposal will require a two-thirds favorable majority of CG&S members voting at the meeting called for that purpose, tentatively scheduled for March 15.

CG&S stockholders are required to vote on the transaction, but MKC stockholders are not because MKC is the unified entity and the unification plan does not constitute more than 25 percent of the aggregate stockholders’ equity.

Prior to the unification vote, MKC will propose a bylaw change to its stockholders to increase the number of board members from nine to 13 to accommodate the merger. The new board will be reduced over two years to nine persons. The 13 directors will include the existing nine directors from MKC and two directors from CG&S and FCE.

Regarding employee changes, the letter stated, “Marketplace changes may dictate various employees having different responsibilities in the unified company. The unified company’s goal is to hire, train and maintain high-quality employees.”

Dave Christiansen, chief executive officer at MKC will retain that role with the unified cooperative. Lyman Adams, chief executive officer of CG&S, will be part of the senior management team. Herb Stange, chief executive officer at FCE, will be retiring this spring.

Informational meetings about the unification proposal were held Feb. 16 in Marion, Lehigh and Hillsboro.

A fourth meeting was held Monday, Feb. 27, at the Canton American Legion Building.

CG&S operates elevators in all four of those locations.

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