Archer Daniels Midland reached a long-awaited agreement over
the sale of its chocolate business to rival agribusiness giant Cargill, which
paid $440m, in the latest of a series of investments in the sector.
ADM - which began late in 2012 to source potential buyers
for its overall cocoa and chocolate operations - said that it hoped in the first
half of 2015 to close the deal, which will see some 700 staff transfer to
The groups are believed a year ago to have come close to a
deal for the combined operations, for which a value of $2bn was reported, before
fears of triggering antitrust concerns prompted them to focus on the sale of
the chocolate operations only.
Combining ADM's cocoa processing operations, number two in the
world industry behind Barry Callebaut, with Cargill's third-ranked business
would have created a group with more than 35% of the market, a concentration
deemed likely to have alarmed regulators.
While regulators approved Barry Callebaut's $860m purchase
of Petra Foods' cocoa division last year, that consent was dependent, certainly
among European authorities, on the existence of "two strong competitors" in
separate ADM and Cargill operations.
Patricia Woertz, the ADM chairman and chief executive, said
that Tuesday's sale "helps improve ADM's returns and will allow us to redeploy
capital for higher-return investments".
ADM is undertaking something of an overhaul of its operations,
buying ingredients group Wild Flavors for $3bn last month, after buying an outstanding
20% in German grain trader Toepfer International, and last week opening its new
headquarters in Chicago, shifted from Decatur.
For Cargill, the acquisition - which comes with six chocolate
plants, in Belgium, Canada, Germany the UK and the US – "will help us better
serve our customers in North America and Europe," said Bryan Wurscher,
president of Cargill's cocoa and chocolate North America operations.
"Our customers will benefit from a broader product
portfolio, greater access to innovation and product development support."
The deal also represents the latest of a series of
investments in the sector by Cargill, which in May commissioned a $100m cocoa
processing plant in Indonesia, with capacity to grind 70,000 tonnes of beans a
In March, the group revealed it had spent some $14m
expanding its cocoa liquor facilities at its plants in Rouen, France and
In December, Cargill unveiled $48m plans to double the
capacity of its biggest European chocolate factory, in Belgium.
"Cocoa and chocolate products have been key contributors to
Cargill's business since 1979," said Jos de Loor, president of Cargill's cocoa
and chocolate business for Europe and Asia.
"We continue to invest strongly in the development of our
own facilities and people, and we welcome the opportunity to embrace these new