Archer Daniels Midland Company (ADM) recently announced three significant actions in the company’s ongoing portfolio management: an agreement to sell the company’s South American fertilizer business, pursuit of the sale of the company’s chocolate business, and the acquisition of the remaining stake of Alfred C. Toepfer International GmbH.
“These actions complement recent demand-driven strategic investments, such as our $250 million high-value protein facility in Brazil,” Woertz added. “We are taking action to realize returns today and positioning ourselves for continuing profitable growth around the globe in the future.”
First, ADM has signed an agreement to sell its fertilizer business in Brazil and Paraguay to The Mosaic Company for $350 million. The transaction consists primarily of five ADM-owned blending facilities in Brazil and Paraguay. The purchase price includes $150 million in working capital. As part of the transaction, ADM will purchase fertilizer from Mosaic after the closing and will continue to supply certain fertilizer customers in Brazil and Paraguay. The proposed sale will be contingent on customary regulatory approvals.
ADM also announced it will pursue the sale of its chocolate business, while retaining the majority of its cocoa press operations. The company has engaged advisers to facilitate the sale process.
“Over the last year or so, we’ve taken significant actions to improve our cocoa business, most notably by significantly reducing invested capital. At the same time, we have also seen industry conditions improve as crop supplies have returned to normal,” said Woertz. “Given improved underlying conditions and the success of our efforts to reduce capital intensity, we see a promising outlook for the cocoa press business and believe it will meet our returns objectives.
ADM has chocolate manufacturing operations in Hazleton, Pa.; Milwaukee, Wis.; Georgetown, Ontario; Liverpool, U.K.; Manage, Belgium; and Mannheim, Germany.
Lastly, ADM announced it will acquire the remaining 20% minority stake of Alfred C. Toepfer International for €83 million, representing about 1.1x net book value. The proposed transaction, which is occurring through the exercise of a put agreement by Union InVivo, will be subject to customary regulatory approvals. Since 2002, ADM has owned 80% of Toepfer; InVivo has held the remaining 20% since 2010. InVivo will remain a strategic business partner for ADM in Europe.