The Unholy Matrimony of Mergers

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The Unholy Matrimony of Mergers

Traditional Coop Mergers Aren’t Working. Optimization by Landus Offers a New Way.

By Erika Osmundson

At Landus we believe in leaning into the future, and that future includes a new approach to mergers and acquisitions. Traditional mergers are clearly not working, and the ag cooperative system is suffering for it. Rather than the conventional model of rushing to join businesses, your cooperative has implemented an innovative alternative: Optimization by Landus.

“Mergers and acquisitions have had their place in the past, but as of late, the consolidation of coops has not put farmer's best interests at the center,” said Matt Carstens, CEO and president of Landus. “While initial intentions may have been good, farmer-owners have to be tired of the form letters asking for their vote that are filled with empty promises that never come to fruition.”

Landus is proud to be revolutionizing this space with Optimization. We can confidently say that this business model puts farmers at the center and provides value for our farmer-owners, Landus, and our Optimization partners.

What is Optimization?

Carstens has an excellent analogy for describing the Optimization process and potential outcomes. He shares that traditional mergers and acquisitions are often a rush to the alter. Two companies joining with all of the perceived value, but also the baggage.

Optimization, in Carstens’ analogy, is by contrast a phased approach of dating, engagement, and then potentially marriage. Just like with relationships, there is evaluation and discovery along the way, and not all relationships end in marriage.

The beauty of this model is that nothing changes or looks different to the farmer. The brands remain autonomous, we preserve the local community presence, and employees experience little change. The value of Optimization is behind the scenes in things like maximizing capital investments, infrastructure capacity, and access to an existing pool of employee talent. And if done well, the farmer-owner shouldn’t see a difference other than to reap the rewards!

Optimization’s truest asset is that it offers both Landus and the potential partner a course of action that includes plenty of time to make sure there is a positive path forward.

Let’s take a quick look at each step in Carstens’ Optimization analogy.


This first phase is similar to the start of a new relationship. There is an agreement of mutual interest. From there you begin to explore the possibilities of a relationship, in this case, a business venture. Much of this first phase is leadership and key stakeholders talking about opportunities and possibilities for collaboration. There is also discussion around company vision, strategic plans, and company culture. Making sure there is alignment and common thinking.

“During this step, we are looking at each other’s strengths and how through a partnership we can provide more value to our farmer-owners,” said John King, Optimization & Procurement Lead. “That value might be through agronomy or grain, or it could be solely back office. Whatever the case, the assessment component is key.”

King points out that while initial assessments are important, it doesn’t mean that the partnership is limited to the original outlined opportunities. Part of the beauty of Optimization is that it allows the relationship to evolve and bring in new components as the timing is right and both parties feel comfortable.

Agreements are tailored to the strengths of each party and developed on a case-by-case basis.


With humor, Carstens shares that this is the part of the relationship where you learn all of the not-so-fun stuff about your partner! Does the other person snore? Do they leave the toilet seat up? Do they leave their socks inside out in the laundry? In the engagement phase, both organizations have the chance to uncover some of the challenges and concerns the other may have.

Let’s look at an example, one that is pretty common and becomes a sore spot of many mergers and acquisitions. The idea of a surplus of staff. This is a common occurrence with growing businesses. One day you evaluate and you realize that you are overstaffed.

In a conventional merger/acquisition, the companies join and whoever is at the helm has to deal with the excess employee count. This typically results in a reduction of force and many unhappy farmer-owners when their preferred contacts has been let go.

In the Optimization model, the accountability remains with the individual organizations. In the above scenario, the organization with the employee surplus would be expected to address that situation under their own brand and before any formal merger would be considered. That tough but necessary change must be enacted under their name, not under the Landus name.

King shares that this step of engagement is important to building the relationship and should not be rushed. He mentions that many Optimization partnerships can remain in this phase for several years or even longer if all is going well.

“Complete transparency is so important in this phase of the journey,” said King. “There is no way a partnership can move along successfully without open communication and dedication to working through the hard stuff. Traditional mergers and acquisitions are often plagued by lack of focus on this aspect.”

Carstens echos this sentiment and believes that the ‘engagement’ phase is the key to Optimization.

“We all have opportunity to improve and working through this phase of Optimization sheds light on how we can position ourselves better,” said Carstens. “This is also the part of the process that minimizes the potential risk of quick action and overlooking potential challenges that could be concerning for our farmer-owners.”

By the end of the engagement phase with each Optimization partner, we will have identified a complete list of potential concerns and an action plan for working through them. Most of these concerns will be acted on through the engagement phase by the respective organization, all the while continuing to identify synergies and ways to assist each other.


This final step may or may not happen. Carstens shares that he believes that not all Optimizations will end in marriage or the more traditional merger/acquisition. If the Optimization is going well and there is no telling reason to enter into a full merger, the Optimization partnership can continue as is.

“With the Optimization model, we can accomplish the value of a merger/acquisition without the risk and challenges. It would be a unique, strategic scenario that would warrant a look at the more conventional merger,” said Carstens.

He also points out that some Optimization partnerships will run their course. We may see some of the partners throughout the process change course and go a different direction. Which Carstens says is just another point to the value of Optimization. We can leverage the resources of each other until the time comes when it makes sense to part ways without hard feelings or an array of legal unrest to work through.

The Optimization Advantage

There are many advantages to Optimization, but the big picture is one of the most compelling.

“Being able to collaborate on common challenges with all of the different team members from each participating company to find solutions that increase member value is the greatest value of Optimization,” said Kevin Jones, President of Optimization Partner, NuWay-K&H. “It has been extremely eye-opening to see how much potential value there could be for the members of each organization when we are willing to work together.”

Doug Riese, President of Optimization Partner, Mid-State Milling, offered, “Working together to provide better services and products to our customers is the biggest value of Optimization.”

Better together for our farmer-owners! It’s a common theme among our Optimization partners and perfectly aligned with Landus’ guiding principles. The most notable gain already realized by Landus through this model is an immediate step forward financially on day one of the Optimization. Rather than the typical near-term impact of a traditional merger that takes a cooperative’s P&L backwards, Landus makes an immediate gain and knows precisely what that gain amount will be when the partnership is initiated.

But more importantly, what are some of these value points for our farmer-owners?

The obvious is the increase in size and scale with which we can come to the market. Whether that is in buying of chemicals, fertilizers, or nutrients or in merchandising grain on a larger scale. The increase in size and scale also means a larger geographic footprint, and while Landus remains dedicated to our farmer base here in rural Iowa, the broader geography minimizes some risk when considering growing conditions and weather impacts. This risk management is valuable to all.

“Part of size and scale is it allows us to merchandise/procure larger deals with managed risk because of the channel we have to weigh this across,” said King. “Whether it is a commitment on agronomy products, rail freight, or equipment. When we have favorable economic opportunities for us all that require more risk, that risk is easier to stomach when there are multiple parties pulling on the same chain.”

Of course, there are financial gains to be had from integrating back-office functions for efficiency and speed. Purchasing power discounts are realized across the system. Plus, there’s the opportunity to explore new markets due to scale and diversification, to name a few.

“There are many benefits to members, that we are just beginning to realize,” said King. “As optimization grows we are going to continue to get compared to the big box stores in the ag business. We are compiling like minded partners in some of the best places in the world to grow grain. Our demand is important to manufacturers, exporters, or end users and they will come to us first for their big needs.”

As we look at a changing industry, we must evaluate the status quo. As it relates to mergers and acquisitions, the traditional model has gotten away from truly putting farmers at the center of the decision. The system is broken and farmers have for too long suffered the consequences of a cooperative system that has gotten out of touch with its purpose. Landus’ passion for reengaging with the purpose of cooperatives – to do for farmers what they can’t do for themselves – is exactly why Optimization is a better path to necessary growth.

“Where we are now with Optimization is only the tip of the iceberg,” said Carstens. “We are and will continue to explore partnerships that we feel could be advantageous to Landus and our farmer-owners, as well as to our current Optimization partners and their members. We will continue to innovate and lead in this space for the betterment of our farmer-owners and the agriculture industry as a whole!”

The benefit of Optimization for Landus farmer-owners:

  • No disruption to farmers
  • Focus on local strengths
  • Increased size and scale
  • Risk management gains
  • Increased buying power
  • More opportunities
  • Efficiency in back-office responsibilities
  • Financial gains
  • Maintain company identity
  • Business accountability

Hearing from Our Optimization Partners

It is easy for Landus to point out the positives and value of Optimization, as the driver of the concept. We wanted to bring you perspective from some of our Optimization partners and what they think about Optimization.

We sat down and sought input from two early Optimization partners, Kevin Jones with NuWay-K&H and Doug Riese with Mid State Milling (MSM).

What success have you seen given the Landus Optimization relationship so far?

NuWay: It has been extremely eye-opening to see how much potential value there could be for members of each organization when we are willing to work together to solve common challenges that each organization has.

MSM: There have been some doors opened up by Landus for Mid-State Milling to work on together for some early potential business growth.

What was it about Landus that grabbed your attention and drove the Optimization to fruition?

NuWay: How like-minded, transparent, and honest the leadership team and employees have been.

MSM: Landus has a very good leadership team, and the ability for MSM to learn and grow with the help of a larger entity was very important to the sustainability of my company.

What concerns or challenges have you had with Optimization and how will these be addressed?

NuWay: The biggest challenge will be to keep the lines of communication open so we can continue to build a long-term relationship. This will take a tremendous amount of transparency and honesty on everyone’s part.

MSM: There are always generalized concerns when working closely in a new partnership, but by building trust as we move forward those can easily be addressed.

Any final words on Optimization?

NuWay: I am extremely excited to see how this concept evolves over the long term and to see how much value it can generate for our businesses and therefore our members.

MSM: Landus has been extremely helpful and has treated my company and me as one of their own. This approach is so important to the overall relationship and Optimization process.

NuWay-K&H and Mid State Milling are just two of the five current Optimization partners Landus is currently working with. Each of these partnerships brings unique opportunity and value.

Current Optimization Partners (as of 10/12/2021)

NuWay K&H


Key Impact: Expanding footprint within northern Iowa and southern Minnesota

Snittjer Grain 


Key Impact: Grain handling expertise

Mid State Milling 


Key Impact: Maximize feed infrastructure

United Farmers Cooperative (UFC) 


Key Impact: Expansion of footprint within Minnesota

Smith Fertilizer & Grain


Key Impact: Like-minded operations and expansion of footprint within southeast Iowa



Key Impact: Seed, fertilizer and chemical footprint expansion within eastern Nebraska and western Iowa