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Darling buying Vion Holding unit for $2.17B

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October 7, 2013 01:38 PM EST | AP

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IRVING, Texas — IRVING, Texas (AP) — Food recycling company Darling International Inc. is buying a unit of Vion Holding NV for about 1.6 billion euros ($2.17 billion).

The Irving, Texas, company said Monday that the acquisition will help diversify its product line.

Vion Ingredients, based in the Netherlands, produces specialty ingredients from animal origin for applications in pharmaceuticals, food, feed, pet food, fertilizer and bio-energy. Its brands include Rendac, Sonac, Ecoson, Rousselot, CTH and Best Hides. The company reported 2012 revenue of about 1.6 billion euros ($2.17 billion).

Dirk Kloosterboer will remain CEO of Vion Ingredients and will become chief operating officer of Darling once the transaction is complete. He will also become a Darling board member.

Craig Irwin of Wedbush said in a client note that the transaction should help Darling to go global, as Vion has facilities in Europe, Asia and South America. The analyst maintained an "Outperform" rating and $23 price target.

The deal is expected to close in January 2014, subject to finalization of the required employee consultations in the Netherlands and customary regulatory approvals.

Shares of Darling gained 71 cents, or 3.5 percent, to $21.04 in afternoon trading. The stock has traded in a 52-week range of $15.09 to $22.20.