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Olam buys US peanut sheller for US$176m
OLAM International has agreed to buy US peanut sheller McCleskey Mills for US$176 million, the commodities trader announced early Friday.
McCleskey is the third-largest peanut sheller in the United States with a 12 per cent market share and an annual capacity of about 250,000 farmer stock tonnes, Olam said.
The acquisition will give Olam a foothold in another step of the US peanut supply chain. Olam also controls Universal Blanchers in the US, which specialises in the toll blanching and ingredient manufacturing of peanuts.
"Today, the US is the lowest cost producer of peanuts and has the acreage and resources to expand production," Anupam Jindel, president of Olam's peanut business, said in a statement. "The US peanut industry has an evolved market structure and is advanced in its seed technology, which helps to keep the industry very competitive. We see a steady rise in production and exports in the future to meet the increased demand in emerging markets such as China and India. This provides a clear rationale to invest in US peanut shelling operations and close out an existing gap in our supply chain."
The acquisition will be funded by a combination of internal funds and existing debt facilities. Completion is targeted for the third quarter of fiscal 2015. It is expected to be immediately earnings and returns accretive.