(Reuters) - Olam International Ltd’s $1.3 billion deal to buy Archer Daniels Midland Co’s cocoa business will create one of the world’s top cocoa bean processors and traders, rivaling Barry Callebaut AG and Cargill Inc.
With eight facilities from Singapore to the Ivory Coast, ADM has bean processing capacity of 600,000 tonnes per year, equating to about 14 percent of annual global output.
Global grinding capacity is expected to hit a record of 4.2 million tonnes in 2013/14, according to the most up-to-date estimates from the International Cocoa Organization, mainly due to expansion in Asia to meet burgeoning demand for chocolate in emerging economies.
Grinding beans produces butter, used in chocolate bars, as well as powder, which is used for chocolate flavoring in cookies, ice cream and drinks.
Here are some key facts about the two companies’ cocoa
The Chicago-based firm has eight cocoa bean processing facilities: Ontario, Canada; Koog aan de Zaan and Wormer, the Netherlands; Mannheim, Germany; Ilheus, Brazil; Abidjan, Ivory Coast; Kumasi, Ghana; and, Singapore.
Earlier this year, ADM said it would close its ninth and only U.S. grinding facility in Hazleton, Pennsylvania.
The facilities have total annual capacity of 600,000 tonnes per year in the 4 million-tonne industry.
The Singapore-based commodity merchant has five cocoa processing plants: Nigeria, United Kingdom, Spain, Ivory Coast and Indonesia, the last of which opened in May.
Olam has a cocoa processing capacity of 100,000 tonnes per year. With the ADM assets, its total capacity will reach 700,000 tonnes, or 16 percent of the world’s total capacity.
Olam said it is the largest player in cocoa sourcing in the world and expects to be sourcing 900,000 tonnes of beans per year after the deal is closed, or just over 20 percent of the world’s total production.
The Indonesian plant will have capacity of 60,000 tonnes per year and its facility in the Ivory Coast, the world’s top grower, will have annual capacity of 75,000 tonnes.
The company sources most of its beans in Africa, with an extensive footprint spanning Ivory Coast, Ghana, Nigeria, Cameroon and Republic of Congo in West Africa as well as Tanzania and Uganda in East Africa, its website says.
The cocoa business is headquartered in London, with marketing offices in New Jersey, Singapore, Spain, Kiev and Moscow.
Reporting by Josephine Mason, Luc Cohen and Rujun Shen; Editing by Edmund Klamann