NEW YORK, June 20 Archer Daniels Midland Co
said on Thursday it is in talks to sell its cocoa
business in a further sign that the U.S. agribusiness giant is
focusing on expanding its footprint in the burgeoning global
A sale of ADM's cocoa division, one of the world's largest
and estimated to be worth $2 billion, would be the second major
deal in the industry in just over six months.
"We are currently engaged in discussions about the potential
sale of our cocoa business," a statement said. The company is
one of the four "ABCD" companies that have dominated the global
trade in agricultural goods for decades.
The identity of potential suitors is not known, although the
Illinois-based company first sounded out potential purchasers
about 18 months ago and has held more discussions recently, the
Financial Times reported on Thursday citing people familiar with
the situation. The newspaper was the first to report the talks.
Few other details were available, but the move comes as
Swiss company Barry Callebaut, the world's largest
industrial chocolate maker, finalizes its $1 billion acquisition
of Petra Foods' cocoa operations, tightening its grip
on the global cocoa market.
Cocoa processors have been hit by weak prices for cocoa
ingredients such as cocoa butter, liquor and powder due to a
Prices on ICE U.S. Futures hit two-month lows on Thursday of
$2,152 per tonne. That is 77 percent off the all-time highs of
above $3,800 in March 2011.
The move also underscores ADM's shift towards the grains
sector betting on growing demand from China, the world's No. 1
wheat producer and consumer.
The company is awaiting Chinese regulatory approval for its
$3 billion takeover of Australia's GrainCorp, the
largest bulk grain handler on the Australian east coast.
ADM's cocoa and other processing division reported net sales
of $3.7 billion in 2012, a touch higher than the year before,
accounting for about 4 percent of the company's total net sales.
It said results for the segment declined $57 million to $183
million, making up 7 percent of the company's operating profit.
Cocoa production is still relatively unorganized, with
farmers in West Africa, the world's biggest growing region,
often operating independently on small farms.
The industry is also under more scrutiny than other food
commodities for its environmental impact and sourcing of raw
ADM is one of the four "ABCD" companies alongside Bunge Ltd
, Cargill Inc and Louis Dreyfus Corp.