Cargill has agreed a deal to acquire ADM’s global chocolate business for $440m.
ADM reverted on plans to sell its joint cocoa and chocolate business, ADM Cocoa, last year and instead said it would only sell its chocolate manufacturing operations.
Through the deal announced today, Cargill will acquire ADM’s three North American chocolate plants, located in Milwaukee, Hazleton and Georgetown and three in Europe: Liverpool, UK, Manage, Belgium and Mannheim, Germany.
“This acquisition is a major milestone in Cargill’s chocolate growth strategy and will help us better serve our customers in North America and Europe,” said Bryan Wurscher, president of Cargill Cocoa and Chocolate North America.
Impact of cocoa prices
ADM’s chocolate business was part of a division that was pressured by rising cocoa prices last year and reported a $33m operating loss in fiscal 2013.
“The sale of the chocolate business helps improve ADM’s returns and will allow us to redeploy capital for higher-return investments," said ADM chairman and CEO Patricia A. Woertz.
Louis de Schorlemer refused to speculate whether continued cocoa price hikes would affect Cargill, but said: “We see two things. We see continued year–on-year demand for chocolate products. Worldwide we see a growth in demand and that is stronger in Asia and the Middle East.”
“The second one is that we have put in place the Cargill Cocoa Promise to support a sustainable cocoa supply.”
The Cargill Cocoa Promise, which covers around 15-20% of the company’s cocoa supply, aims to boost the cocoa supply through farmer training community support and agricultural development.
700 new employees
Cargill will add ADM’s Ambrosia, Merckens and Schokinag brands to its portfolio and will gain around 700 new employees.
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.
Cargill had been widely touted as the likeliest suitor for ADM’s chocolate business. Cargill’s communications officer Laura Brems previously told this site that her firm was “assessing a number of initiatives to progress its business strategy,” but she had refused to comment on speculation.
Cargill was pushed off the top spot as the world’s largest cocoa grinder when Barry Callebaut finalized a $950m deal for Singapore-based Petra Foods’ ingredients division this summer.
Cargill Cocoa and chocolate currently operates facilities in Belgium, Brazil, Canada, Côte d’Ivoire, France, Germany, Ghana, the Netherlands, UK and the USA.
ADM Cocoa will continue to supply deZaan branded cocoa ingredients from plants in Mississauga, Ontario; Koog aan de Zaan and Wormer, Netherlands; Mannheim, Germany; Ilhéus, Brazil; Abidjan, Côte d'Ivoire; Kumasi, Ghana; and Singapore.