Olam International strikes 'transformational' deal to acquire ADM's global cocoa business for $1.3bn

16-Dec-2014 - Last updated on 16-Dec-2014 at 00:09 GMT

ADM has struck a deal to sell its global cocoa business to Olam International Limited for $1.3bn.

ADM chairman and CEO Patricia Woertz said the deal would allow ADM 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".

Olam - a leading supplier of cocoa beans with a significant presence in all major cocoa growing regions except Brazil, processing facilities in Côte d’Ivoire and Nigeria, and value-added processing facilities in Spain and the UK - said the deal would catapult it into third place in the global cocoa business behind Barry Callebaut and Cargill, and create significant synergies.

ADM’s cocoa division - which has a cocoa processing capacity of 600,000 metric tons - was put up for sale in summer 2013.

Assuming the deal goes through (it is subject to regulatory approvals, but expected to close in Q2 2015), Olam Coca's cocoa processing capacity will be approximately 700,000 metric tons, said CEO Sunny Verghese: “This proposed acquisition represents a transformational opportunity for Olam Cocoa to become an integrated global leader in a market with attractive growth prospects.”

The deal includes cocoa processing facilities, warehouses, innovation centers and the deZaan brand, but does not include ADM’s global chocolate business, which is being sold to Cargill.

Olam, which is the world’s leading supplier of dehydrated onion, garlic, and capsicums and a leading player in tomatoes, said the deal would allow it to capitalize on ongoing demand for cocoa products in Europe and the US and rapidly growing demand for sustainable high quality cocoa products in emerging markets.

The sale includes processing facilities in Mississauga, Canada; Koog aan de Zaan and Wormer, the Netherlands; Mannheim, Germany; Ilhéus, Brazil; Abidjan, Côte d'Ivoire; Kumasi, Ghana; and Singapore; plus ADM buying stations in Brazil, Cameroon, Côte d'Ivoire, and Indonesia, as well as the company’s deZaan and UNICAO brands.