ADM to Acquire Specialty Commodities for US$170 Million

14 Oct 2014 --- Archer Daniels Midland Company (ADM) has announced an agreement to purchase Specialty Commodities Inc. (SCI), a leading originator, processor and distributor of healthy ingredients, including nuts, fruits, seeds, legumes and ancient grains, for US$170 million, subject to post-closing adjustments.

“One of the ways we are improving returns and reducing the volatility of our earnings is through the expansion of our specialty ingredients portfolio,” said ADM Chairman and CEO Patricia A. Woertz. “One milestone in the ongoing process was the addition of WILD Flavors; the addition of Specialty Commodities Inc. is another step. Consumers around the world are demanding higher-quality, better-tasting, healthier foods with clean labels. We are continuing to add new product streams to our portfolio to enhance our capabilities to serve our customers as they respond to this demand.”

SCI, which was founded almost three decades ago, works with a global network of suppliers to source natural and organic ingredients and distribute them to customers in the snack, ice cream, cereal, nutrition bar, health food, bakery, pet food and bird food markets.

“We are pleased that SCI will become part of ADM,” said Larry Leitner, SCI founding partner and CEO. “SCI’s suppliers, colleagues and customers will benefit from ADM’s world-class innovation, supply-chain and manufacturing capabilities. And with our complementary geographies, similar business models, and shared focus on quality and customers, we see a bright future for the business.”

SCI is majority owned by Goldner Hawn Johnson & Morrison. When the transaction closes, SCI will become part of ADM’s new WILD Flavors and Specialty Ingredients business unit.

“This is another step as we continue to broaden the portfolio of ingredients we offer, enhance our knowledge and expertise, and focus on the quality of our products and the markets that matter most to our customers,” said Greg Morris, president, WILD Flavors and Specialty Ingredients.

ADM anticipates closing the transaction, which is subject to regulatory approval, in the coming weeks.

The move comes amid ADM’s “ongoing portfolio management,” which has recently seen the company enter the flavors space and exit cocoa activities. In early October, ADM completed the €2.3 billion acquisition of WILD Flavors, as it continues strategic expansions in specialty ingredients. WILD Flavors is the latest in a series of strategic expansions in specialty ingredients, including the new Brazilian protein specialties complex and our Chinese soluble-fiber facility. It came one month after ADM sold its global chocolate business to Cargill for $440 million.

ADM will form a new business unit, WILD Flavors and Specialty Ingredients, which will include the WILD business as well as the following ADM product lines:
• Specialty proteins (including isolated soy proteins, textured vegetable protein, soy protein concentrates, and soy flour & grits)
• Emulsifiers
• Edible beans
• Natural health and nutrition (natural-source vitamin E, plant sterols, soy isoflavones and omega 3 DHA)
• Soluble fiber
• Polyols
• Hydrocolloids

Greg Morris will be president of the WILD Flavors and Specialty Ingredients business unit. He most recently was ADM’s president, North American Oilseeds Processing, where in addition to overseeing more than two dozen oilseed crushing plants, he led the creation of the company’s Foods & Wellness business, developing a high-margin, highly specialized portfolio of innovative products.

Morris told FoodIngredientsFirst that the two major recent announcements were not so much a shift in strategy, but rather a continuation of ongoing portfolio management. “For a few years now, we’ve talked about managing our business to maximize earnings and returns while minimizing earnings volatility. And these two actions help us further those goals,” he explains.

“Wild is a highly strategic business that is very complementary to our existing specialty ingredients businesses. This move supplements our already growing foods and wellness portfolio with world-class flavors, adding great, natural taste to ADM’s strengths in nutrition, function and texture. We will be able to offer our customers complete food and beverage solutions that taste great. With a world-class research and innovation capability and with 28 facilities around the world, we will be able to partner with customers and add complete food and beverage systems to our existing successful ingredient sales model. This added capability will also speed our commercialization of innovative technologies by incorporating great taste into solutions from the start,” he added.