Cargill explores possibility of buying ADM’s $2 bn cocoa business

US crop giant Cargill Inc, is exploring the possibility of buying Archer Daniels Midland Co's (ADM) cocoa business worth $2 billion, Reuters yesterday reported, citing a source familiar with the situation.

Cargill, one of the world's leading cocoa traders, conducted due diligence on the business in June, the report said, and added that it was not clear whether it has tabled a bid.

Last month, ADM said that it is in talks to sell its cocoa business, as the Illinois-based company now focuses on expanding its grains business.

The move comes three months after it agreed to pay $3.1 billion to acquire GrainCorp Ltd, Australia's largest independent grains handler. (See: GrainCorp finally submits to ADM's $3.1-bn bid)

ADM's cocoa division, one of the world's largest, is estimated to be worth $2 billion, according to analysts.

It is one of the world's largest processers and suppliers of cocoa and chocolate products and its customer base ranges from industrial manufacturers and global retailers to individual artisans and chefs.

ADM cocoa product line is marketed around the world under five brands, and has manufacturing facilities in the US, Brazil, Ivory Coast, Ghana and Singapore.

Swiss group Barry Callebaut is the world's largest cocoa grinder after it recently acquired Singapore's Petra Foods' cocoa ingredients business, while Cargill and ADM are the second and third-largest. The three of them jointly account for around 40 per cent of the global cocoa bean grinding capacity.

Cargill, based in Minnesota, buys cocoa from countries like Ghana, Indonesia, Brazil and Côte d'Ivoire, and has manufacturing plants in Brazil, Indonesia, France, Germany and the UK.