Archer Daniels Midland revealed a rash of deals, including the
purchase of the outstanding 20% in the struggling Toepfer trading house, in a
drive to boost returns from its disparate portfolio of assets.
The US-based agricultural trader - with Bunge, Cargill and Louis
Dreyfus one of the sector's big three - said that it had sold to nutrient giant
Mosaic its fertilizer blending and distribution operations in Brazil and
The $350m sale, including $150m of working capital, comes 17
years after ADM entered the market, since when the company had "done a good job
building the business", said Patricia Woertz, the ADM chief executive.
"But the lengthy value chain inherent in the fertilizer
business, along with strong competition from fully integrated companies that
have entered the sector, has made it difficult for this business to
consistently meet our return objectives."
Rival Bunge sold its Brazilian fertilizer distribution business to Norwegian nitrogen giant Yara International in 2012, after selling its
Brazilian phosphate mines to local giant Vale for $3.8bn two years before.
ADM also revealed that it was modifying plans to sell its
cocoa and chocolate business, reportedly worth potentially $2bn, after the breakdown
of talks with an unspecified suitor, widely believed to be Cargill.
"In the end, we could not agree to an outcome that met ADM's
objectives," Ms Woertz said.
One of the problems a deal with Cargill is believed to have
run into is over market concentration, with a combined ADM/Cargill operation
boasting 35% of the world processing market, without disposals, and with
Swiss-based Barry Callebaut accounting for a further 25%.
ADM will now divide the operations, selling off the
chocolate business, which has six plants in Belgium, Canada, Germany the UK and
the US, while keeping the cocoa processing business.
"Given improved underlying conditions… we see a promising
outlook for the cocoa press business and believe it will meet our returns
objectives," Ms Woertz said.
The group also unveiled the E83m purchase from Union InVivo,
the French agricultural co-operative, of the outstanding 20% of the Alfred
C Toepfer International, the crop trading house whose poor performance
overshadowed ADM's other-strong full year results released in February.
ADM said at the time that it had launched a "significant review"
of Toepfer, based in Hamburg, after a series of setbacks, ranging from "some
geographic arbitrage that didn't go our way" to "some execution issues",
including Argentine wheat export cancellations and the rejection by Chinese inspectors
of corn import cargos.
"We fumbled and we will correct that," Juan Luciano, ADM chief
operating officer, told investors then.
Ms Woertz said on Tuesday that full ownership of Toepfer,
which "has an important presence in critical origination areas as well as
growing destination markets", would enable ADM to "strengthen this business and
fully integrate it into ADM's global origination network".
The purchase from InVivo, which exercised an option to sell
out of the crop trader, was struck at the equivalent of 1.1 times Toepfer's net
She added that the moves were part of a plan to "deploy our
capital where it can best improve returns".
"Each of these transactions will help ADM continue to
improve returns and create shareholder value."
The group has taken a particularly pro-active role over its
portfolio since in November losing its $3.1bn quest to buy Australian grain
handler GrainCorp, when the deal was blocked by Canberra.
ADM shares since, while closing down 0.9% at
$44.27 in New York on Tuesday, risen by some 28% since the collapse of the
GrainCorp takeover, above the 16% rise in the average New York share