ADM sells global cocoa business to Olam for $ 1.3 billion

ARCHER Daniels Midland Company (NYSE: ADM) will sell its global cocoa business to Olam International Limited (SGX: O32).

The acquisition, which will be valued at $ 1.3 billion, encompasses ADM's entire global cocoa business This includes processing facilities in Mississauga, Canada;. Koog aan de Zaan and Wormer, Netherlands; Mannheim, Germany; Ilhéus, Brazil; Abidjan, Côte d'Ivoire ; Kumasi, Ghana; and Singapore.

The transaction will also cover ADM's buying stations in Brazil, Cameroon, Côte d'Ivoire, and Indonesia. The company's deZaan and Unicao brands will also be included.

The sale is expected to close by the second quarter of 2015 but will be subject to customary regulatory approvals.

ADM chairman and CEO Patricia Woertz said the company continues to improve returns and dampen earning volatility to manage its portfolio toward creating value for shareholders.

"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," Ms Woertz said.

The majority of ADM's 1,550 staff in its cocoa business will transfer to Olam. The sale of ADM's chocolate business to Cargill will, however, continue as planned.

Olam is a leading agri-business operating across the value chain in 65 countries. Of this agreement between the companies, co-founder, Group MD and CEO, Sunny Verghese said: “With Cocoa being a prioritised platform for investment, this proposed acquisition represents a transformational opportunity for Olam Cocoa to become an integrated global leader in a market with attractive growth prospects.”