Olam buying global cocoa business of Archer Daniels Midland for US$1.3b

OLAM International announced on Tuesday that it has agreed to buy one of the world's largest processors and suppliers of cocoa liquor, powder and butter, making it one of the world's top three cocoa processors.

The SGX mainboard-listed agribusiness group revealed that it was acquiring the global cocoa business of Archer Daniels Midland Company (ADM) at an enterprise value on a cash and debt free basis of US$1.3 billion, comprising fixed assets of US$550 million and working capital of US$750 million, subject to closing adjustments.

ADM's worldwide cocoa business (ADM Cocoa) comprises cocoa processing assets made up of eight factories with total capacity of 600,000 MT, 10 warehouses, two usines, four innovation centres, the iconic 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. Over 1,500 ADM Cocoa employees including 30 R&D professionals will join the combined cocoa entity as part of the transaction.

Olam's 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."

The proposed acquisition is expected to enhance value for all of Olam's stakeholders as it transforms Olam Cocoa into a market leading global integrated player with a footprint in all key producing origins.