ADM announces significant actions in ongoing portfolio management

Archer Daniels Midland Company (NYSE: ADM) today announced three significant actions in the company’s ongoing portfolio management: an agreement to sell the company’s South American fertilizer business, pursuit of the sale of the company’s chocolate business, and the acquisition of the remaining stake of Alfred C. Toepfer International GmbH.

“We are committed to ongoing portfolio management to realize value from our businesses and to deploy our capital where it can best improve returns,” said ADM Chairman and CEO Patricia A. Woertz. “The actions we are announcing today are results of this continuing process. Each of these transactions will help ADM continue to improve returns and create shareholder value.

“These actions complement recent demand-driven strategic investments, such as our $250 million high-value protein facility in Brazil,” Woertz added. “We are taking action to realize returns today and positioning ourselves for continuing profitable growth around the globe in the future.”

Agreement to Sell Brazil and Paraguay Fertilizer Business

ADM has signed an agreement to sell its fertilizer business in Brazil and Paraguay to The Mosaic Company (NYSE: MOS) for $350 million. The transaction consists primarily of five ADM-owned blending facilities in Brazil and Paraguay. The purchase price includes $150 million in working capital. As part of the transaction, ADM will purchase fertilizer from Mosaic after the closing and will continue to supply certain fertilizer customers in Brazil and Paraguay. The proposed sale will be contingent on customary regulatory approvals.

“Our fertilizer team has done a good job building the business since we purchased our first blending facility in 1997,” said Woertz. “But the lengthy value chain inherent in the fertilizer business, along with strong competition from fully integrated companies that have entered the sector, has made it difficult for this business to consistently meet our return objectives. By selling our blending assets—while retaining our distribution business—we will be improving our returns while maintaining our important origination relationships with key growers in Brazil and Paraguay.”

Pursuit of Sale of Chocolate Business

ADM will pursue the sale of its chocolate business, while retaining the majority of its cocoa press operations. The company has engaged advisers to facilitate the sale process.

“Over the last year or so, we’ve taken significant actions to improve our cocoa business, most notably by significantly reducing invested capital. At the same time, we have also seen industry conditions improve as crop supplies have returned to normal,” said Woertz. “Given improved underlying conditions and the success of our efforts to reduce capital intensity, we see a promising outlook for the cocoa press business and believe it will meet our returns objectives.

“We had extensive negotiations with a potential buyer regarding the sale of our global cocoa and chocolate business. In the end, we could not agree to an outcome that met ADM’s objectives. Instead, ADM is moving ahead with a process to sell our global chocolate business while retaining most of our cocoa press operations. This approach will position ADM to realize the greatest overall value from these businesses.”

ADM has chocolate manufacturing operations in Hazleton, Pa.; Milwaukee, Wis.; Georgetown, Ontario; Liverpool, U.K.; Manage, Belgium; and Mannheim, Germany.

Acquisition of Remaining Stake in Toepfer

ADM will acquire the remaining 20 percent minority stake of Alfred C. Toepfer International for €83 million, representing about 1.1x net book value. The proposed transaction, which is occurring through the exercise of a put agreement by Union InVivo, will be subject to customary regulatory approvals. Since 2002, ADM has owned 80 percent of Toepfer; InVivo has held the remaining 20 percent since 2010.

“Toepfer has an important presence in critical origination areas as well as growing destination markets,” said Woertz. “For years, ADM has benefitted from our investment in Toepfer. Now, full ownership will allow us to strengthen this business and fully integrate it into ADM’s global origination network.”

InVivo will remain a strategic business partner for ADM in Europe.