Archer Daniels Midland (ADM) has announced that it will retain the majority of its cocoa processing operations but will sell its chocolate business.
The world’s third largest cocoa grinder ADM said in June last year that it was in talks to sell its cocoa ingredients division - a business unit that reported a $33m operating loss in fiscal 2013.
Now it intends to retain the majority of its cocoa presses, but will divest its chocolate manufacturing operations.
ADM sees promising outlook for cocoa processing
“Over the last year or so, we’ve taken significant actions to improve our cocoa business, most notably by significantly reducing invested capital. At the same time, we have also seen industry conditions improve as crop supplies have returned to normal,” said ADM Chairman and CEO Patricia A. Woertz.
“Given improved underlying conditions and the success of our efforts to reduce capital intensity, we see a promising outlook for the cocoa press business and believe it will meet our returns objectives,” she continued.
She said that ADM had been in extensive negotiations with a potential buyer, but could not agree a deal.
Cargill a likely buyer?
Cargill has been widely touted as the likeliest suitor. Cargill’s communications officer Laura Brems previously told this site that her firm was “assessing a number of initiatives to progress its business strategy,” but she refused to comment on speculation.
Cargill was pushed off the top spot as the world’s largest cocoa grinder when Barry Callebaut finalized a $950m deal for Singapore-based Petra Foods’ ingredients division this summer.
ADM’s cocoa and chocolate business
ADM Cocoa has an annually grinding capacity of around 600,000 metric tons (MT) and accounts for 15% of global cocoa processing – third behind Barry Callebaut and Cargill.
The company also has chocolate manufacturing operations in Hazleton, Pa.; Milwaukee, Wis.; Georgetown, Ontario; Liverpool, U.K.; Manage, Belgium; and Mannheim, Germany.
AD said that it had engaged advisers to facilitate the sale process.