Singapore’s Olam International has agreed to acquire the global cocoa business of Archer Daniels Midland Company, in a $1.3bn deal.
This new development is expected to enhance Olam's chocolate and cocoa businesses, in an effort to cut spending and reduce debt last year.
ADM's worldwide cocoa business comprises cocoa processing assets made up of eight factories with total capacity of 600,000 MT, 10 warehouses, two usines, four innovation centres, the deZaan brand and its 2,150 plus customer franchise, and a marketing network across 16 countries.
The acquired business does not include assets under ADM's global chocolate business.
Olam finance and business development executive director A. Shekhar said: "The acquisition of ADM's cocoa business has the potential to nearly double the EBITDA for the confectionery and beverage ingredients segment and add substantially to the midstream value chain and the overall Company by FY2018.
"It is also expected to improve EBITDA/IC returns starting from the first full year post closing and exceed the return target for the midstream value chain by FY2018 on a standalone basis."
This proposed acquisition has been supported by Temasek's indirect wholly-owned subsidiaries Breedens Investments and Aranda Investments.
The purchase amount will be financed through a combination of cash and existing debt facilities and the transaction is expected to close between April and June 2015, Olam said.
Earlier this month, Olam agreed to acquire US peanut sheller McCleskey Mills, in a $176m deal.
Image: This buying of cocoa business will help Olam Cocoa to become one of the world's top three cocoa processors. Photo: courtesy of
Keith Weller, USDA ARS.
