Cargill to Buy ADM’s Chocolate Business for $440 Million

02 Sep 2014 --- Cargill has agreed to purchase Archer Daniels Midland Company’s (ADM) global chocolate business for $440 million. The acquisition is an excellent fit with Cargill’s existing chocolate business and brings together two organizations with strong talent, broad customer bases and extensive research and development capabilities.

“ADM announced that it was selling its’ cocoa business in May 2014 and we have been talking to them since and are happy about the deal today,” Louis de Schorlemer, EMEA Corporate Communications Manager at Cargill told FoodIngredientsFirst. “For us the rationale behind it is to grow our presence in North America with strong customer base and research & development capabilities and boosting our distribution network.”

“This acquisition represents an excellent fit with Cargill’s existing chocolate business and brings together two organizations with strong customer bases and extensive research and development capabilities,” de Schorlemer adds. “It will help us better serve our customers in North America and Europe. It will also bring together great people with a deep passion and commitment to producing excellent chocolate and our customers will benefit from a broader product portfolio, greater access to innovation and product development support.”

The transaction includes ADM’s three North American chocolate plants, located in Milwaukee (Wis.), Hazleton (Penn.), and Georgetown (Ontario), and three in Europe: Liverpool (U.K.), Manage (Belgium) and Mannheim (Germany). These new facilities will extend and complement Cargill’s existing chocolate footprint across North America, Europe, Asia and Brazil, and increase production capacity, particularly in North America.

“As part of our ongoing portfolio management, we considered several options to strengthen the returns of this part of our business,” said ADM Chairman and CEO Patricia A. Woertz. “The sale of the chocolate business helps improve ADM’s returns and will allow us to redeploy capital for higher-return investments.”

Cargill’s product portfolio will also add ADM’s Ambrosia®, Merckens® and Schokinag® brands. Upon completion Cargill will gain approximately 700 new employees.

The combined business will be able to offer enhanced capabilities and broader product ranges to support the long-term needs of the chocolate market. There will also be real benefit to customers’ final products through access to Cargill’s extensive application capability and deep understanding and experience of texturizers, oils, fats and sweeteners.

“Cocoa and chocolate products have been key contributors to Cargill’s business since 1979,” said Jos de Loor, president Cargill Cocoa & Chocolate EMEA and Asia. “We continue to invest strongly in the development of our own facilities and people, and we welcome the opportunity to embrace these new operations and further build on our success together.”

The company is deeply committed to ensuring the success of the cocoa farmers and markets throughout its global supply chain through the Cargill Cocoa Promise, which focuses on farmer training, community support and farm development. Cargill is determined to continue to support, invest in and further secure the long-term viability of a strong and sustainable cocoa bean supply chain.

The transaction is subject to regulatory approval in the United States and the European Union. It is expected to close in the first half of 2015.

The move will effectively see the industrial cocoa sector consolidate into two major players: Cargill and Barry Callebaut. “We see that there is a steady and growing demand for cocoa products, particularly in regions such as Asia and the Middle East. We believe that the market is very well served with a number of excellent chocolate companies. It is really about offering a broader product portfolio for our customers, so we see this as a positive development,” de Schorlemer says.

Chocolate is one of the areas where Cargill sees strong growth potential within the food ingredients platform business as a whole, with two major investments announced recently. “This is one of the areas where we have been strongly developing. We have recently invested €100 million in our cocoa processing plant in Indonesia that will open later this year. We have invested €60 million in our Belgian chocolate plant, so we definitely see a lot of opportunities there,” notes de Schorlemer. Production at the facilities will now benefit from the additional cocoa that comes onboard through the ADM acquisition.

By Robin Wyers