ADM is one step closer to being completely out of the chocolate and cocoa business.
Cargill has announced that it has completed a deal with ADM to buy its global chocolate business.
Valued at $440 million, the acquisition has been in the works for nearly a year, with Cargill announcing its plans to acquire ADM back in September 2014. At that time, Cargill had expected the deal to close in the first half of 2015.
ADM also is currently working on deal to sell its cocoa business to Olam Int’l Ltd. The company announced back in December 2014 that it was working to finalize an agreement to sell its global cocoa business to Olam for $1.3 billion, subject to customary adjustments.
The deal between Cargill and ADM includes ADM’s three North American chocolate plants, located in Milwaukee, Wis.; Hazleton, Pa.; and Georgetown, Ontario; as well as two in Europe: Liverpool, U.K.; and Manage, Belgium. Cargill’s product portfolio will also add ADM’s Ambrosia, Merckens, and Schokinag brands.
However, Cargill has agreed to divest ADM's industrial chocolate production facility in Mannheim, Germany as part of a plan to comply with the European Commission’s conditional clearance.
The Mannheim facility will be kept as a separate entity with its own interim management until transferred to a prospective buyer. Chocolate production and service to customers will continue to operate normally.
About 670 colleagues will transfer from ADM to Cargill as part of the deal, ADM says.
“I would like to thank the chocolate team for their dedication, and we,of course, wish them the best,” says Juan Luciano, ADM ceo.
Cargill says the move underlines its commitment to meeting customer needs and represents a milestone for its chocolate growth strategy.
"Along with our access to the global cocoa supply chain and an enhanced technology base, we will be able to improve the delivery of new applications to our customers,” says Jos de Loor, president of Cargill's cocoa and chocolate business EMEA and Asia. “We are seriously committed to helping our customers grow and are excited to begin our new journey."
As for ADM, Luciano says the move is just one of the ways the company is continuing to look for ways to create shareholder value, just like the proposed sale of its cocoa business.
“We are continuing to create shareholder value, whether through profitable growth — such as the recent expansion of our port network and the addition to our corn footprint in Europe — or by divesting businesses for which we don’t see a long-term path toward achieving acceptable returns,” he explains. “I am proud of the team that identified and delivered on this sale and others like it — including the proposed sale of our cocoa business — which are helping to ensure that we continue to drive results for our shareholders and our company.”
Cargill's cocoa and chocolate business now operates globally with 27 sites in 11 countries with more than 3,000 employees and serves customer needs worldwide with a distinctive range of innovative and high quality cocoa and chocolate products, tailor-made for confectionery, bakery, dairy, and other applications.
And the outlook is a positive one.
"Bringing together the talents and expertise of our two organizations will enable us to have a broader market reach and an even better product and service capability," comments Bryan Wurscher, president Cargill Cocoa and Chocolate North America. "By understanding and responding to customers' needs we will be able to offer them distinctive value, which in turn will help create growth opportunities for our customers and for our business, as we increase the scale and focus of our operations."