03 Oct 2013 Cargill close to agreeing purchase of ADM cocoa unit?
Reuters reports that Cargill, one of the world’s leading cocoa traders, is in the final stages of a deal to buy Archer Daniels Midland Co’s cocoa business, citing sources familiar with the situation and potentially creating a price-setting global giant.
Combining two of the world’s top cocoa merchants and bean grinders would create a company big enough to compete with Zurich-based Barry Callebaut, the world’s largest maker of industrial chocolate products.
Cargill and ADM are said to be hammering out the final details of the deal, according to the sources, paving the way to the second major takeover this year in an industry that is set to be dominated by two firms. The timing of an official announcement is not known but could be made within days, the sources said.
“As the cocoa market will now be dominated by both Barry Callebaut and Cargill, the small players need to be competitive or they might risk being squeezed out of the market,” said Vanessa Tan, an investment analyst at Phillip Futures in Singapore.
Financial details of the deal were not clear, may be worth as much as $2-billion. Cargill was long believed to be one of only a handful of companies with the expertise and focus on the niche cocoa business to buy ADM’s business, which spans Africa, Asia and the United States. The US-based agribusiness firm had begun conducting due diligence earlier this year.
In July, Barry Callebaut sealed its $860-million acquisition of the cocoa ingredients division of Petra Foods…..