American Maize-Products Co.

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American Maize-Products Co.

250 Harbor Drive
Stamford, Connecticut 06902
(203) 356-9000
Fax: (203) 359-1020

Wholly Owned Subsidiary of Eridania Beghin-Say, S.A.
1906 as Western Glucose Co.
Sales: $441 million
Employees: 1,450
Stock Exchanges: American Chicago
SICs: 2046 Wet Corn Milling; 2048 Prepared Feeds & Feed
Ingredients for Animals & Fowls; 2087 Flavoring Extracts
& Flavoring Syrups, Nec

American Maize-Products Co. manufactures and sells products derived from corn wet milling, such as corn sweeteners and starches for use in the manufacturing processes of several industries. In the wet-milling process the starch component is either dried for sale or processed further into other products. These include high-fructose corn syrup, which is widely used as a sweetener in the soft-drink industry. In the mid 1990s American Maize was the only producer in North America and the largest producer in the world of cyclodextrins, doughnut-shaped molecular structures produced from starch that had many applications. American Maize was acquired in 1995 by a French company, Eridania Beghin-Say, S.A., a unit of Montedison SpA and the largest starch producer in Europe. Eridania then announced it would sell 88 percent of American Maizes tobacco-products subsidiary, Swisher International, Inc.

American Maize originated as Western Glucose Co. in Hammond, Indiana, and was incorporated in Maine in August 1906. It produced two items: corn starch and corn syrup. William Ziegler acquired control of the company in 1907. Royal Baking Powder Co. purchased a majority of the capital stock of Western Glucose in January 1908 and changed its name to American Maize-Products two months later. Royal Baking Powder sold its holdings in American Maize to its stockholders of record on October 11, 1928.

At the time of this sale American Maize was manufacturing corn sugar, cereal sugar, refined corn oil, special starches, dextrins, and other corn products. Its plant in Hammond comprised 42 buildings and contained 645,000 square feet of floor space, with a grinding capacity of about 35,000 bushels of corn per day. The company had about 600 employees. Its assets were valued at $7.5 million at the end of 1929. Net income increased from $81,823 in 1927 to $1,558, 440 in 1929. The company had its headquarters in New York City.

American Maize continued to make a profit and pay dividends during the Great Depression of the 1930s. By the end of 1933 the number of its employees had grown to about 1,000. Net income rose from $60,586 in 1935 (the most severe year of the Dust Bowl drought) to $777,663 in 1939. By the end of the decade branch offices had been established in Atlanta, Boston, Chicago, Los Angeles, Pittsburgh, St. Paul, and Seattle.

By 1950 American Maize was manufacturing a line of packaged goods as well as syrups, starches, corn oil, and various chemicals derived from corn. The number of buildings at its plant had grown to 47, with 789,149 square feet of office space, and grinding capacity had increased to about 40,000 bushels of corn per day. Branch offices had been added in Brooklyn and Buffalo. C.M. Armstrong, Inc., had been established as the companys sales agent in the chemical field. William Ziegler, Jr., was chairman of the board. Net sales grew from $10.1 million in 1940 to $25.4 million in 1949, and net income from $549,744 to $782,432. The best year of the decade was 1946, when net sales reached $28.6 million and net income $1,415, 201.

The 1950s was an uneventful decade for American Maize. Its plant capacity remained the same, and its mix of products changed little. Net sales rose only from $28.4 million in 1950 to $36 million in 1959, after reaching a decade-long high of nearly $38 million in 1956. Net income, however, rose from a decade low of $513,206 in 1951 to a high of nearly $2.4 million in 1958 before slumping slightly to $2.1 million in 1959. Reflecting higher profits, the dividend per share increased in the late 1950s, and investors bid up the stock from a high of $36 a share in 1955 to a high of $84 in 1959.

By the mid 1960s American Maize had moved aggressively into the development of new products. A new class of carbohydrate esters with a variety of nonfood as well as food uses, the starch phosphates, were being produced by the company at a pilot facility in Central City, Nebraska, from a special type of corn grown under contract. Among these products was Ediflex, a wholly digestible, water-soluble transparent packaging film. By this time American Maize was manufacturing more than 100 different products. Although the food industry was taking 70 percent of its volume, it was also selling to the paper, textile, adhesive, chemical, oil-well drilling, pharmaceutical, and fermentation industries. Net sales reached $50.7 million in 1965, and net income $3.4 million.

In 1966 American Maize moved into the tobacco-products field by acquiring Jno. Swisher & Son, Inc., a privately owned cigar maker based in Jacksonville, Florida, for $36 million in cash. Swisher, a tobacco grower in the South and producer of King Edward cigars, the best-selling cigar in the United States, had earned $2.9 million in 1965 on sales of $42.2 million. It became a subsidiary of American Maize. In 1969 Swisher acquired Boyer Brothers, Inc., a privately owned manufacturer of popular-priced cup candies, for 20,000 shares of newly created preferred stock.

By expansion and acquisition, American Maize had grown into a much larger company by 1970. Its plant comprised about 60 buildings on about 80 acres of land, and its grinding capacity had increased to 60,000 bushels of corn per day. Ediflex, made in Central City, was being shipped in rolls to a packaging plant in Saddle Brook, New Jersey. The company owned a warehouse in Beacon Falls, Connecticut, and leased warehouses in Pittsburgh and South Boston, Massachusetts. Swisher owned three cigar-manufacturing plants, a filler-tobacco preparation plant, and 4,400 acres of land in western Florida. Candy and related products were being manufactured in Altoona, Pennsylvania. William Ziegler, Jr.s son, William Ziegler III, became chairman of the board in 1964.

Net sales reached $106.6 million in 1969. Corn processing accounted from 48 percent, tobacco for 47 percent, and candy for five percent. Of corn-processing sales, corn syrup and corn-syrup solids for the food and beverage industries accounted for about 45 percent, starches and dextrins used by the paper, textile, chemical-laundry, and food industries for 33 percent, and corn germ sold to other refiners for further processing and corn meal and feed sold to livestock-feed dealers for 22 percent. However, net income was only $3.4 million in 1969. The companys acquisitions had raised debt from zero to an estimated 39 percent of total capitalization by the end of 1971, the year the company also bought S.A. Schonbrunn & Co., a privately held coffee roaster, for $14.6 million in cash.

American Maizes program of diversification was based on its belief that the growth prospects of corn refining were limited, with sales growing an average seven to eight percent a year, and earnings perhaps ten percent a year at best. Its objective was to dilute sales based on corn milling to about 25 percent of total sales. The companys cigars were seen as soon outstripping corn products in both sales and profits. Its coffee brands, including Savarin, Medaglia dOro, El Pico, and Old Dutch, were well established and popular in the Northeast. Boyer, whose products included Mallo Cup and Smoothie, was thought to be the second-largest producer of cup candies in the United States. Chocolate manufacturing was added to its operations in 1971.

By the mid 1970s American Maizes earnings picture had improved. The company had profits of $9.2 million in 1974 on sales of $218.1 million. Ironically, however, that year corn processing, rather than the newer areas of company operations, accounted for more than 80 percent of operating profits. The Hammond plant increased to grinding capacity of 85,000 bushels a day in 1975 and was operating at 90 percent of this capacity. By contrast, cigar consumption was slipping, and the coffee operation lost $500,000 in 1974. William Ziegler III became American Maizes chief executive officer in 1975. The company moved its executive offices to Stamford, Connecticut, in 1979.

Despite its problems with diversification, American Maize was seeking a new area of profits in building materials. In 1974 it acquired Briggs and Lundy Lumber Cos. for about $3.7 million. Reestablished as the companys Lundy-Briggs Co., Inc., division, it operated building materials and home improvement centers in Pennsylvania and upstate New York. In 1978 American Maize acquired certain assets of Berwind Corp.s Buchanan Building Supply division, a marketer of home-improvement supplies and construction materials, for $5.2 million. A year later the company purchased Dill Enterprises, Inc., and its affiliate, Lloyds of Connecticut Inc., for $7.5 million. This acquisition added 19 Lloyd Lumber stores in Connecticut and New York to the 20 similar stores in Pennsylvania and New York.

In 1975 American Maize joined with the Amalgamated Sugar Co. of Ogden, Utah, a major beet-sugar processing company, in a joint venture to produce high-fructose corn syrups. The resulting Amalgamaize Co. opened a 30,000-bushel-a-day facility near Decatur, Alabama, in 1977. The wisdom of this decision was manifest by 1980, when Coca-Cola Co. authorized its domestic bottlers to substitute high-fructose corn syrup for up to half the (more-expensive) sugar in Coca-Cola. Later Pepsi-Cola announced that it would also use high-fructose corn syrup as a partial substitute for sugar. During the five-year period that ended in 1979, corn processing accounted for 45.2 percent of American Maizes revenues and 51.5 percent of its profits. American Maize bought Amalgamated Sugars half-share of Amalgamaize in 1983.

American Maizes sales reached a record $413.7 million in 1980 and its net income a record $10.7 million. Next to corn processing, cigar production was the largest source of company profits, with Swishers gains in market share compensating for a 15-year-long decline in cigar consumption. Candy operations played a relatively insignificant role in the companys finances. Coffees contribution to profits had been low and highly volatile because of the fluctuating price of the commodity. The company sold its Schonbrunn coffee subsidiary to Tetley Inc. for about $16 million in 1982 and its Boyer candy subsidiary to Consolidated Brands Inc. in 1984.

Building-materials supply stores, under the Briggs, Buchanan, and Lloyd names, were seen as a growth area for American Maize in the early 1980s. However, although accounting for about 25 percent of the companys sales volume in this period, they did not fulfill their promise, losing almost $500,000 in 1981 and about $1 million in 1982. In 1988, when this unit, Lloyd Home and Building Centers, accounted for revenues of $107 million, or nearly 20 percent of American Maizes total, the company took a $4 million restructuring charge, including $2 million for the writeoff of intangible assets. American Maize dissolved Lloyd in 1990 by closing or selling the remaining 17 stores, taking $20 million in losses.

American Maize formed Amalgamaize into a new subsidiary, American Fructose Corp., in 1983. It sold some of its common stock to the public in 1984, raising $20 million and leaving American Maize with a 68-percent share in the company. By then high-fructose corn syrup had become the largest volume product in the 100-year history of corn wet milling, and American Maize was completing an expansion program that would make the Decatur plant capable of producing 550 million pounds of the product (on a dry basis) per year. To raise production capacity even higher, American Maize acquired Amstar Corp.s Dimmitt division in November 1984 for about $43 million in cash, giving American Fructose a second plant, in Dimmitt, Texas.

Meanwhile, production at American Maizes Hammond facility increasingly was being given to specialty starch and syrup products. In 1988 the first plant in North American was opened at Hammond for the production of cyclodextrins, biosynthetically produced starch-derived chemicals with broad application in the food industry to enhance taste, smell, texture, and color.

Swisher increasingly was giving attention to the more promising overseas cigar market, having acquired an exporter, Martin Bros. Tobacco Co., in 1980. European cigar consumption was rated at almost three times the level in the United States. In 1986 American Maize acquired the smokeless tobacco (chewing tobacco and snuff) business of the Helme Tobacco division of Culbro Corp. for about $67 million. It also purchased some assets of Universal Cigar Corp. for about $13 million. Tobacco products accounted for 24 percent of American Maizes sales volume of $547.5 million in 1988 and an impressive 71 percent of its operating income of $27.5 million that year.

By 1990 American Fructoses annual capacity to manufacture high-fructose corn syrup had grown to one million pounds. Roughly two-thirds of its sales of $155.4 million in 1988 came from this product, of which it held about eight percent of the market, and 26 percent of its fructose sales were to Coca-Cola. In 1993 American Maize acquired and merged American Fructose, paying $30.8 million in cash for about 11 percent of its shares and exchanging the rest of the shares for a like number of American Maizes class A common stock.

Problems with American Maizes home-improvement centers resulted in a deficit of $2.8 million in 1989. The companys net sales of $547.5 million in 1988 was not topped until 1994, and although net income recovered smartly during 1990-92, operating profits fell to only $214,000 in 1993. Mainly because of an accounting change for retirement benefits, it took a $31.2 million net-income loss that year. By then Zieglers stewardship of the company was being challenged by his own sister. Ziegler had added the posts of president and chief operating officer to his responsibilities in 1989. A year later Helen Ziegler Stein-kraus filed the first of a half-dozen lawsuits in four states aimed at removing her brother and bringing in new management. She won part of her objective when Ziegler agreed in 1992 to step down as president and allow his successor to run day-to-day operations.

During this battle it emerged that the family holding company controlling American Maize had an odd number of shares, and that Zieglers trusts held one more share than his sisters trusts, which in turn gave him control of 47 percent of the companys Class B voting shares to go with another seven percent in his own name. Steinkraus and her family contended that this arrangement violated various wills. Her suit was rejected by a New York City court in 1994. Nevertheless, in March 1995, while Steinkrauss case was on appeal, the directors of American Maize accepted a $40-a-share, $430 million bid (later raised to $441.7 million) for the company by Eridania Beghin-Say S.A., a French agro-industrial concern. The directors planned to get around Zieglers opposition by issuing new shares of Class B stock to put him in the minority.

Ziegler filed a lawsuit in Maine to block the issuance of the new shares and won a temporary blocking order in April 1995. The impasse ended in July, when Eridania overcame Zieglers opposition by agreeing to sell 88 percent of American Maizes tobacco business, Swisher International, for $165 million to a group led by him and to loan him $20 million to finance the acquisition. According to a federal filing, an investor group had been prepared to offer $225 million for Swisher, which reported operating profits of $24 millionup 73 percentin 1994. Eridania said it intended to retain the remaining 12 percent of Swisher.

American Maize had net income of $26.9 million in 1994 on net sales of $604 million. Of this total, corn processing accounted for 73 percent of net sales, or about $441 million, with tobacco products responsible for the remainder. Corn processing accounted for 65 percent of company profits, or about $17.5 million. The companys long-term debt was $264.7 million at the end of 1994.

The Ingredients Division, located in Hammond, was manufacturing all of American Maizes corn starches in 1995, extracting them from common, waxy, and high amylose and various new hybrid strains of corn. It also produced modifications of these starches by chemical or physical processes to make products designed to serve the particular needs of various food and industrial uses. Specialty starch products derived from waxy corn were being used as stabilizers, fillers, thickeners, and extenders in such products as canned and frozen foods, pie fillings, puddings, salad dressings, baby foods, soups, and snack foods. Waxy corn starches were also being used as adhesives by the gummed-tape industry.

In addition, the Ingredients Division was producing corn-syrup solids, maltodextrins, dextrins, and cyclodextrins. Corn-syrup solids and maltodextrins were being used in a variety of food applications, including dry-food and beverage mixes and microwaveable and convenience foods. Dextrins were being sold to the paper, adhesives, textile, and chemical industries for their sizing and adhesive properties. Cyclodextrins had many applications, including fragrance carrying, cholesterol removing, and drug delivery in the pharmaceutical industry. Corn germ, corn-gluten feed, and corn-gluten meal were byproducts of this divisions operations. Corn germ was being sold for further processing into corn oil and corn-germ meal. Corn-gluten feed and corn-gluten meal were being sold for use in animal feeds.

The Sweetener Division, based in Chicago, was producing glucose corn syrups and high-fructose corn syrup. Corn syrups were being used in many foods and beverages for both sweetness and also such attributes as color, texture, and freezability. High-fructose corn syrup was being used primarily by the soft-drink industry as a sweetener. Sales to Coca-Cola accounted for about 14 percent of American Maizes revenues in 1994.

American Maizes wholly owned Hammond facility, located on about 113 acres, had a grinding capacity of about 85,000 bushels of corn per day in 1995. A construction program, expected to be completed by the end of 1996, was to increase grinding capacity by about 30 percent and corn-syrup capacity by about 50 percent. The leased Decatur facility had a grinding capacity of about 55,000 bushels per day. The part-owned Dimmitt facility also had a grinding capacity of about 55,000 bushels per day. American Maize was leasing its executive offices in Stamford, its Sweetener Division offices in Chicago, various storage and distribution facilities in various locations, and rail-transportation equipment.

Principal Subsidiaries

American Maize-Products Decatur Inc.; American Maize-Products Dimmitt Inc.; American Maize Technology, Inc.; AMP International Exporting, Inc. (Barbados); AMPCO Holding Corp.

Further Reading

American Maize-Products Company, Wall Street Transcript, September 10, 1984, p. 75, 195.

Barrett, William P., Soured Blood, Forbes, June 8, 1992, p. 126.

Gordon, Mitchell, Higher Prices, Strong Demand Sweeten American Maize Profits, Barrons, January 12, 1976, pp. 62-63.

, Not Chickenfeed: American Maize-Products Sees Gains from Building-Supply Stores, Barrons, January 10, 1983, pp. 43-45.

Lesly, Elizabeth, A Bittersweet Harvest for American Maize, Business Week, August 7, 1995, p. 31.

Lipin, Steven, Single Share Shapes Furor in Family, Future of Firm, Wall Street Journal, March 7, 1995, p. C1.

Muldoon, Joseph B., American Maize-Products, Wall Street Transcript, March 9, 1981, p. 60, 781.

Nacmanie, Miron, American Maize-Products Co., Wall Street Transcript, February 21, 1972, p. 27, 269.

Shalita, Barbara L., Acquisition Route Means Growth for American Maize, Investment Dealers Digest, January 9, 1967, pp. 26-27.

Strong Prices, New Consumer Lines Spur American Maize-Products Net, Barrons, November 30, 1970, pp. 28-29.

Trovell, Thomas N., Jr., High on Fructose, Barrons, September 15, 1980, pp. 48-49, 54.

Wyatt, Edward A., The Rains Came, Barrons, June 12, 1989, pp. 15, 67.

Robert Halasz

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American Maize-Products Co.

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