ADM completes JV with Aston Foods, strengthens animal nutrition role with Neovia move
03 Jul 2018 --- Archer Daniels Midland Company (ADM) and Russia-based Aston Foods have successfully received all required regulatory approvals and launched their 50-50 joint venture to provide sweeteners and starches to customers in Russia.
Aston is one of Russia’s largest agricultural and food ingredients businesses, with activities in farming, oilseeds crushing, edible oils and grain origination, in addition to its sweeteners and starches business unit. ADM has had operations in Russia since 1980. With the launch of the new joint venture, ADM and Aston will partner to own and operate Aston subsidiary AKP, which includes a wet corn mill in Ibred, as well as a sales office in Moscow. Situated approximately 180 miles south-east of Moscow, the Ibred plant is strategically located to serve significant customers in the Russian food and beverage industry.
Pierre Duprat, President for Europe, Middle East and Africa at ADM tells FoodIngredientsFirst: “This investment continues the global expansion of ADM’s sweeteners and starches business, giving us capabilities in the growing Russian food and beverage market.”
The demand for sweeteners and starches in Russia has developed recently and continues to develop actively. Duprat expects to see this growth continue in the future: “We expect to achieve revenue synergies as we leverage our global network to enhance these corn facilities’ capabilities, and cost synergies as we help to introduce production efficiencies – both to improve yields and to reduce costs, including energy costs,” he explains.
A statement sent to FoodIngredientsFirst from Vadim Vikoulov, CEO of Aston, upon closing, reads: “Our joint venture has now got an excellent opportunity to realize the synergies of cooperation between two companies having wide competences in the production of the starches and sweeteners, as well as marketing and logistics. We expect to have a substantial effect from developing the product portfolio and implementation of the energy-saving technologies.”
“This investment is the latest in a series aimed at expanding ADM’s geographic footprint in regions of expected growth worldwide. We’re pleased to continue diversification with the expansion of our sweeteners and starches capabilities into Russia,” adds Duprat.
“This is an exciting opportunity to bring together our experience and strengths to grow the jointly-owned corn business. With AKP, we are in an excellent position to serve our customers’ needs in Russia and meet anticipated growth in demand, both in the local market and globally,” he notes.
Effective since June 29, 2018, the joint venture will operate under the name AKP and will be managed as a standalone entity. Its board will be made up of equal representation from the two parent companies. ADM and Aston’s other businesses in Russia will remain separate.
ADM announces proposed acquisition of Neovia
The move comes as ADM announces that it is in discussions to purchase Neovia, a global provider of value-added animal nutrition solutions, with 72 production facilities and a presence in 25 countries, headquartered in Saint-Nolff, Britanny, France. The company, which is currently majority owned by leading French agricultural cooperative group InVivo, has about 8,200 employees. It has 11 R&D centers in six countries. The cash deal has an approximate enterprise value of €1.53 billion (US$1.9 billion), subject to customary adjustments.
“The acquisition of global leader Neovia would represent a transformative step for our Animal Nutrition business and a major strategic investment in France,” says ADM Chairman and CEO Juan Luciano.
“At ADM, everything starts with the farmer, and we are eager to deepen our relationships with French farmers and agriculture as we bring together the resources, technologies and expertise of two companies.”
“The acquisition of Neovia would be a major step as we continue to execute the value creation strategy we first outlined in 2014,” Luciano continues. “Neovia is a major global provider of animal nutrition solutions, with significant operations in Western Europe, South and Central America, and Southeast Asia. Combining Neovia’s global presence and product and innovation expertise with our own growing Animal Nutrition footprint and capabilities would create one of the world’s leading animal nutrition providers, capable of offering complete solutions for customers around the globe – and would be the ideal platform for future growth.”
Founded in France in 1954, Neovia manufactures and sells a wide range of nutrition solutions for the feed industry, including premix and value-added services, pet care, additives and ingredients, aquaculture and complete feed.
“This transaction is a great opportunity for both Neovia and ADM to establish what will be a global leader in animal nutrition solutions. ADM will pursue partnerships with French cooperatives and reinforce its relationships with the French agricultural world. At the same time and in line with our strategy ‘2025 by InVivo,’ the sale of Neovia will enable us to accelerate our transformation by favoring investments in our growth levers: agriculture, agribusiness & wine, and retail & digital, in France and abroad,” declares Thierry Blandinières, CEO of InVivo.
“This is an important addition, not only for our animal nutrition business but for our entire integrated Nutrition platform,” notes Vince Macciocchi, ADM’s Senior Vice President, Nutrition. “In recent years, health and wellness trends in human nutrition – such as clean label, natural ingredients, and innovative solutions – are being echoed in animal nutrition. With Neovia, we will have global capabilities that span human and animal nutrition, expanding our reach and enhancing internal efficiencies. From colors and flavors to enzymes and bioactives, our new integrated nutrition platform will offer an unparalleled array of ingredients and solutions to meet customer needs.”
Under French law, the signing of an acquisition agreement is subject to that process and regulatory approvals. The acquisition is expected to close by the fourth quarter.
