Olam International Ltd, a top three coffee and rice trader, has agreed to purchase Archer Daniels Midland’s (ADM) cocoa unit for $1.3 billion, becoming a global top three cocoa processor. The announcement of the deal, which is Olam’s largest to date, follows closely upon its purchase of U.S. peanut sheller, Mc Cleskey Mills for $176 million earlier this month. Over the past 15 years the demand for cocoa has increased three times faster than population growth, and this year cocoa powder demand in emerging markets is forecast to match the demand in more traditional chocolate consuming markets in the U.S. and Europe. Olam already controls the world’s biggest bean-sourcing network, however, this deal will give the company an additional 600,000 tons of processing capacity from Brazil to Singapore allowing it to sell directly to buyers such as Hershey and Nestle. The all-cash deal, which is expected to close in the second quarter of 2015 will place Olam in direct competition with Barry Callebaut AG and Cargill Inc.
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