Dive Brief:
- Cargill Inc., the largest private company in the U.S., will buy the global chocolate business of agribusiness giant ADM for $440 million.
- The deal includes six factories—three in North America and three in Europe—and comes amid a major push by Cargill to increase its chocolate-making capacity around the globe.
- Not included in the deal are the cocoa-processing facilities owned by ADM.
Dive Insight:
It's going to take some time for the markets to assess the impact of this transaction. The $440-million price may not be all that significant for a deal involving two of the four agribusiness giants known as the ABCD companies (ADM, Bunge, Cargill and Louis Dreyfus), but it's part of a larger trend in which those companies reposition themselves in different sectors of the commodities game.
First, Cargill has been quite open about its belief that the world's chocolate business offers tremendous opportunities. ADM, on the other hand, has been acquiring ingredients businesses and seems intent on buying more.
And therein is the key: Late last year the market was convinced that Cargill was about to buy all of ADM's cocoa-related businesses. ADM had been looking to unload those for quite some time, and a deal was said to be close at hand. But between then and now it seems that ADM has taken a look around the globe and decided that its future is in ingredients... including cocoa.