Olam completes $1.2-bn acquisition of ADM's global cocoa business

Singapore's Olam International yesterday said that it has completed the $1.2-billion acquisition of the global cocoa business of Archer Daniels Midland Co (ADM).

Olam expects the acquisition to generate an EBITDA of between $180 and $200 million including synergies at steady-state in 2018, representing a 20-22 per cent growth over the results for the year ended June 30, 2014. 

In December 2014, Olam, Asia's largest agri-business firm, said that it will acquire the global cocoa business of US agricultural processor ADM for approximately $1.2 billion.

The acquisition will make Olam one of the world's top three cocoa producers with a combined annual capacity of around 700,000 tonnes with strong manufacturing, R&D and product development skills.

The deal will give it beans sourced from all major origins via a network of 650,000 farmers ensuring stability of supply, quality and traceability, 12 advanced processing, refining and milling facilities in the main producing countries of Côte d'Ivoire, Nigeria, Ghana and Brazil, as well as in or adjacent to consumption markets in Europe, the US, Canada and Asia.

The deal will also bring in a portfolio of brands like the iconic deZaan, plus West African origin brand UNICAO and Latin American brand Joanes.

Olam's co-founder, managing director and CEO, Sunny Verghese said, ''Olam Cocoa is now a leading, global integrated supplier of cocoa products. This is a transformation of an already strong, prioritised business platform with attractive market prospects that is poised to contribute significantly to Group EBITDA by 2018.''

''Having been in cocoa for 32 years, it is with a mixture of pride and purpose that I see two world class businesses unite in Olam Cocoa. Together we have created a dynamic and experienced enterprise with sustainable sourcing and the iconic deZaan brand at its heart,'' said, CEO of Olam Cocoa, Gerard.

Olam is a leading agri-business operating across 65 countries, supplying various products to over 13,800 customers worldwide.

The group's cocoa arm, Olam Cocoa, is one of the world's largest suppliers of cocoa beans with trading presence in all major cocoa regions except Brazil and has processing facilities in Ivory Coast, Nigeria, Spain and the UK.

Chicago, Illinois-based ADM is one of the world's largest agricultural processors and food ingredient providers, serving customers in over 140 countries.

ADM offers a full line of cocoa products in a variety of forms such as cocoa liquor, cocoa powder and butter, to meet a wide range of customer applications.

Over 1,500 ADM Cocoa employees including 30 R&D professionals will join Olam Cocoa as part of the deal. ADM's global chocolate business is not included in the deal.