Food-processing company Archer Daniels Midland Company yesterday announced that it has reached an agreement to sell its global cocoa business to Olam International for $1.3bn.
The sale encompasses ADM’s entire global cocoa business, including processing facilities in Mississauga, Canada; Koog aan de Zaan and Wormer, Netherlands; Mannheim, Germany; Ilhéus, Brazil; Abidjan, Côte d’Ivoire; Kumasi, Ghana; and Singapore. Also included are ADM’s buying stations in Brazil, Cameroon, Côte d’Ivoire, and Indonesia, as well as the company’s deZaan and UNICAO brands.
“We are continuing to actively manage our portfolio to create shareholder value by improving returns and dampening the volatility of our earnings,” said ADM Chairman and CEO Patricia Woertz. “This transaction will allow us to redeploy capital to investments that offer improved returns potential and less volatility than the cocoa business, or distribute excess capital to shareholders, or a combination of both.”
According to Olam, demand for cocoa, the main ingredient in chocolate, has increased three-fold compared to population growth in the last 15 years and demand in emerging markets is now matching that of traditional regions such as Europe and the US.
Olam already has the world’s largest cocoa bean sourcing network, but with this purchase the company will greatly bolster its processing capacity, allowing it to sell directly to buyers including Nestle and Hershey.
The majority of the approximately 1,550 employees in ADM’s cocoa business will transfer to Olam with the sale and the transaction does not impact the sale of ADM’s chocolate business to Cargill, which ADM said is progressing as planned.