ADM recently completed the purchase of Eaststarch C.V., a 50-50 joint venture with Tate & Lyle. Through the acquisition, ADM has obtained corn wet mills in Bulgaria and Turkey and a 50 percent stake in a wet mill in Hungary. This purchase will result in a combined daily grind capacity of approximately 200,000 bushels, along with the capability to produce sweeteners and starches. In addition, the Hungary facility has the capacity to produce ethanol for fuel, beverage, and industrial uses. While the final purchase price was not disclosed, it was estimated to amount to €240 in cash when the deal was first announced in April 2015.

 

Apart from achieving further geographic diversification, this deal will allow ADM to profit from the expected end of EU Sugar Reform, set to expire in MY 2016/17. The 2007 reform sets an EU sugar production quota for food purpose of 13.5 million MT annually.

 

When first announcing the deal in April, president of ADM’s Corn Processing business unit Chris Cuddy explained, “With the coming end of sugar production quotas in the EU, the artificial cap on cereal-based sweeteners will be lifted. There will be tremendous opportunities in the new European sweetener market, including a particularly strong opening in Eastern Europe, where there is less sugar production… At the same time, we are improving our capabilities to meet customer needs in the growing market for starch in Europe.”