Cargill in final talks for ADM’s cocoa business unit

Cargill, an American agricultural and industrial conglomerate, is in final negotiations over a deal to purchase Archer Daniels Midland’s (ADM) cocoa business, which is reportedly estimated to be worth around $2bn.

The parties have not disclosed the timing of an official announcement and financial terms of the deal; however, it could be announced within days, reported Reuters citing sources with knowledge of the matter.

If completed, the deal would become the second major takeover this year in the cocoa industry.

The sale would allow ADM to focus on its agricultural portfolio such as corn and oilseeds, including soya beans, as it finalises a $3bn deal to acquire Australian grain handler GrainCorp.

Since 2012, ADM has consulted a number of potential buyers over the potential sale of its cocoa division.

In June, the company confirmed that it was involved in talks to sell the division.

ADM Cocoa is a major processor and supplier of cocoa and chocolate products, catering to customers in the confectionery, bakery, dairy and other food industries.

Cargill has overcome several parties who were interested in taking over individual assets, but refused to buy the whole business, sources said.

A Cargill official was quoted as saying, "We will communicate as and when there is anything definitive."

With this acquisition, the agribusiness firm is seeking to tap the increasing long-term demand for chocolate in emerging markets.

In recent years, Cargill has been expanding significantly in the segment – in 2011, it acquired German cocoa grinder Kakao Verarbeitung Berlin.

In May this year, it commenced construction of a $100m cocoa processing facility in Indonesia.

The company operates cocoa processing facilities in West Africa, Brazil, Indonesia and major markets in Europe.

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Image: Cargill’s office in Wayzata, Minnesota. Photo courtesy of Cargill, Incorporated.