* Small, one-off acquisitions more likely than large ones
* After Glencore-Viterra, further consolidation expected
By Karl Plume
CHICAGO, April 3 U.S. agribusiness Archer
Daniels Midland Co will continue to eye acquisitions of
smaller assets in North America to expand its reach in the
agricultural sector, while large acquisitions may be less
likely, a company executive said on Tuesday.
"Other than one-off deals, we can't really grow too much in
North America," said A. James Shafter, vice president of mergers
and acquisitions said on the sidelines of The State of
Agribusiness conference in Chicago.
"We'll always do one-off deals. Elevator assets,
transportation assets, if it's in our sector, we'll look at it,"
ADM's recent M&A deals include numerous grain elevator
acquisitions in the United States and Europe and a partnership
with Missouri-based Prairie Pride, a soybean processor and
The agricultural sector is in the midst of the largest wave
of consolidation since the 1990s, highlighted by a mega-deal
last week that saw Swiss-based commodities trader Glencore
International Plc buy Viterra Inc, Canada's
largest grain handler, for $6.2 billion.
ADM did not submit a final bid for Viterra after deeming the
cost of the acquisition would not meet their return objectives.
U.S. grain company Gavilon could be the next major player on
the agribusiness auction block in a deal that is expected to
attract not only grain companies seeking to expand their U.S.
footprint, but also newer investors in the agricultural sphere.
Investors such as sovereign wealth funds, endowments,
pension plans and others have been drawn to agricultural
investments over the past decade amid the promise of strong
returns as global demand for food grows.
But the emergence of the broader range of investors plying
for assets such as grain elevators, ethanol plants and railcar
loading facilities further underscores the need for grain
companies such as ADM to remain disciplined in their
acquisitions as the competition stiffens, Shafter said.
"Five or 10 years ago, we'd never see these financial
players showing up. There's just been an explosion in
agriculture and there's going to become, I believe, a scarcity
of assets and we're going to see more and more consolidation,"
"Companies have got to be smart and they need to know where
they're going to go and they have to be able to react very
quickly and decide what deals they want to pursue."