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ADM raises Wilmar stake in 'opportunistic' purchase

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Archer Daniels Midland, fresh from the $1.2bn sale of its cocoa business, has bought further shares in Singapore-based Wilmar International in a drive to exploit the growing Asian food market.

ADM - which is with Bunge, Cargill and Louis Dreyfus one of the "ABCD" of agricultural trading giants - said that it had "recently" raised further its Wilmar stake, from the 17.3% it reached late last year.

"We have opportunistically acquired shares of Wilmar in the open market," ADM spokesperson Jackie Anderson told Agrimoney.com.

"This is another way for us to drive results for our shareholders," she added, saying that the investment represented "of the ways in which we are benefiting from Asian consumers' growing and evolving food demand", lifted by both growing population and incomes.

"We expect this investment to further improve our overall returns," Ms Anderson said.

'Unusual trading activity'

While ADM has yet to reveal the extent of its latest purchase, the comments to Agrimoney.com came minutes after Wilmar unveiled the deal in response to a Singapore stock exchange inquiry.

Wilmar, whose shares soared 8.9% in Singapore on Wednesday, said that an internal investigation into the "unusual trading activity" had revealed from one of its directors that ADM had bought extra shares, and would be "timely" in revealing the details.

Wilmar's directors include Juan Luciano, the ADM chief executive.

The volume of shares purchased was outlined by Wilmar as "reflecting approximately only 22% of total sales volumes" for Wednesday.

The trading volume of Wilmar shares in Singapore on Wednesday, at 23.78m, was the highest in 17 months, according to Reuters data.

'Clear, aggressive plan'

ADM's purchase comes 10 months after it paid Sing$194m, equivalent to $147m at the time, to buy 60m shares in Wilmar, raising its stake from 16.4% to 17.3%, in a move it also said was aimed at exploiting growing consumer demand in Asia.

It bought these shares from Martua Sitorus, the Wilmar executive deputy chairman.

ADM on Friday unveiled the completion of the sale, "valued at about $1.2bn", of its global cocoa business to Olam International, another major Singapore-based trading house.

Indeed, Noble Agri, Olam and Wilmar have been termed the "Now" group of large Asian agricultural traders, although Chinese state-owned trader Cofco, which bought control of Noble Agri last year, is gaining increasing in international prominence too.

Mr Luciano said on Friday that the group was "delivering on a clear, aggressive plan to create value through strategic growth, an increased focus on operational efficiencies and – when necessary – the divestiture of businesses that we believe are unable to meet, in the long run, our returns objectives".

Other companies in which ADM has a stake include GrainCorp, the Australian grain handler, of which it owns 19.8%.

ADM shares closed down 0.6% at $45.70 in New York.

By Mike Verdin

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