Archer Daniels Midland’s (ADM) exit from the chocolate processing business will see Cargill expand its own chocolate arm in Ontario.
The two global grain and agrifood players on Tuesday announced an agreement in which Cargill will buy ADM’s worldwide chocolate business for US$440 million.
The sale includes ADM’s chocolate plant at Georgetown, Ont., about 15 km northwest of Mississauga, plus two U.S. plants, at Milwaukee and at Hazleton, Pennsylvania, along with plants at Liverpool, England; Manage, Belgium; and Mannheim, Germany.
The ADM plants, which together employ about 700 people and supply the confectionery, bakery, dairy, beverage and snack-foods industries, are expected to “extend and complement” Cargill’s own chocolate business worldwide and increase its production capacity, “particularly in North America.”
Cargill — whose chocolate and cocoa brands worldwide include Wilbur’s, Veliche, Peter’s Chocolate and Gerkens Cacao — already operates a Wilbur’s plant at Burlington, Ont.
The deal will also see Cargill take over ADM’s Ambrosia, Merckens and Schokinag chocolate brands.
The combined business, Cargill said Tuesday, “will be able to offer enhanced capabilities and broader product ranges to support the long-term needs of the chocolate market.”
Cargill also predicted “real benefit to customers’ final products” by way of the company’s “extensive application capability and deep understanding and experience of texturizers, oils, fats and sweeteners.”
The agreed-upon sale is expected to close in the first half of 2015, pending regulatory approval and other conditions.
“As part of our ongoing portfolio management, we considered several options to strengthen the returns of this part of our business,” ADM CEO Patricia Woertz said Tuesday in a separate release. “The sale of the chocolate business helps improve ADM’s returns and will allow us to redeploy capital for higher-return investments.”
The deal does not include ADM’s interests in cocoa, the key ingredient in chocolate. ADM processes its deZaan cocoa ingredients at Mississauga, and at Koog aan de Zaan and Wormer, Netherlands; Mannheim, Germany; Ilheus, Brazil; Abidjan, Cote d’Ivoire; Kumasi, Ghana; and Singapore.
Selling its chocolate business while keeping its cocoa press operations “will position ADM to realize the greatest overall value from these businesses,” Woertz said in April.
The deal also doesn’t include ADM’s cocoa processing operations at Hazleton, about 150 km north of Philadelphia. ADM said Tuesday it will close that plant and lay off its 90-odd employees. — AGCanada.com Network