Boston, MA 09/03/2014 (wallstreetpr) – Oilseeds, corn, wheat, cocoa, and other agricultural commodities processor, Archer Daniels Midland Company (NYSE:ADM) had struck a deal with Cargill to divest its worldwide chocolate business for $440 million. The deal is expected to be consummated next year.
Divestiture Deal
As a result of the divestiture, Archer Daniels’ three chocolate plants in North America in Ontario of Georgetown, Hazleton in Pennsylvania, and Milwaukee in Wisconsin would go to the Europe-based Cargill, a statement issued by Archer Daniels said.. This apart, Archer Daniels’ three plants in Europe, namely, Mannheim in Germany, Manage in Belgium, and Liverpool in the United Kingdom would also be transferred to Cargill.
The deal is predicted to close before the first half of the next year, subject to the approval from the regulators in the U.S., as well as, the European Union.
Employees Fate
Once the transaction is completed, approximately 700 employees would be added into Cargill from Archer Daniels. The transaction would also allow 1,560 employees of cocoa to continue its supply activities to customers throughout the world.
On its part, Archer Daniels would eliminate approximately 90 jobs due to the sale transaction since it would also be ending its cocoa processing activities at Hazleton in Pennsylvania. Archer Daniels Midland Company (NYSE:ADM) had indicated that it would offer its affected employees outplacement assistance, as well as, severance packages.
Management Speaks
Archer Daniels Chairman and Chief Executive Officer, Patricia Woertz, said that as part of its ongoing management of its portfolio, it considered several choices to support the returns of its business. He believed that the divestiture of its chocolate business would help enhance the returns apart from allowing Archer Daniels Midland Company (NYSE:ADM) to redeploy its capital for high-return investments.
Cargill To Benefit
The deal would undoubtedly benefit Cargill since it would be in a position to extend its footprint in the three States of North America apart from the European Union. As a result, Archer Daniels Midland Company (NYSE:ADM) would be in a position redraw its strategy for Chocolate business both the short term, as well as, the long-term.
