MARKET DEVELOPMENT
ADM Boosts Stake in Food Commodities Rival Wilmar
ADM Boosts Stake in Food Commodities Rival Wilmar
08/12/2014 (Financial Times) - Archer Daniels Midland has increased its stake in Wilmar International of Singapore as the food commodities giant tries to move more volumes outside its historic US base.
Chicago-based ADM paid S$194m ($147m) for an additional 60m shares of Wilmar, boosting its stake from 16.4 per cent to 17.3 per cent, according to a securities filing Friday. It bought the shares from Martua Sitorus, Wilmar executive deputy chairman and an associate of Kuok Khoon Hong, chief executive.
Wilmar controls about 45 per cent of production and trade in palm oil, the most widely used vegetable oil found in products from biscuits to shampoo. It is controlled by the Kuok family of Malaysia.
The two companies’ relationship dates to their days operating soyabean crushing joint ventures in China. ADM later converted its stake in the ventures into equity in Wilmar. Juan Luciano, ADM’s incoming chief executive, sits on Wilmar’s board.
In February, Mr Kuok said of a potential deal between the two companies: “We’ll get married one day.” He later added: “But unless conditions for marriage are good, we’ll just work closely with each other. So far we have not found the right conditions”.
ADM is among the handful of global companies that specialise in buying grain and oilseeds from farmers in surplus regions such as Brazil and the US and selling them in countries that are net importers, such as China. Grain shipments destined for use as animal feed are growing at an especially fast pace into eastern Asia, where consumers want more meat as their incomes rise.
News of the increased stake comes days after ADM disclosed plans to double its worldwide grain handling volumes. While the bigger stake is not directly related to that goal, Wilmar is ADM’s top customer, particularly in soyabeans.
“Our investment in Wilmar is one of the ways in which we are benefiting from growing consumer demand in Asia. Wilmar — Asia’s leading agribusiness — is a strategic partner and one of our largest customers,” ADM said.
Wilmar was not immediately available for comment.
In June, ADM took full ownership of Alfred C Toepfer International by purchasing the remaining 20 per cent of the German trading house it did not already own for $157m. It also holds a near 20 per cent stake in GrainCorp of Australia, after Canberra blocked a takeover bid late last year.
Robert Moskow, analyst at Credit Suisse, said it was pursuing a “capital-light” strategy and “expanding its distribution and destination markets” as it sought to double its grain handling business in four to seven years.
Chicago-based ADM paid S$194m ($147m) for an additional 60m shares of Wilmar, boosting its stake from 16.4 per cent to 17.3 per cent, according to a securities filing Friday. It bought the shares from Martua Sitorus, Wilmar executive deputy chairman and an associate of Kuok Khoon Hong, chief executive.
Wilmar controls about 45 per cent of production and trade in palm oil, the most widely used vegetable oil found in products from biscuits to shampoo. It is controlled by the Kuok family of Malaysia.
The two companies’ relationship dates to their days operating soyabean crushing joint ventures in China. ADM later converted its stake in the ventures into equity in Wilmar. Juan Luciano, ADM’s incoming chief executive, sits on Wilmar’s board.
In February, Mr Kuok said of a potential deal between the two companies: “We’ll get married one day.” He later added: “But unless conditions for marriage are good, we’ll just work closely with each other. So far we have not found the right conditions”.
ADM is among the handful of global companies that specialise in buying grain and oilseeds from farmers in surplus regions such as Brazil and the US and selling them in countries that are net importers, such as China. Grain shipments destined for use as animal feed are growing at an especially fast pace into eastern Asia, where consumers want more meat as their incomes rise.
News of the increased stake comes days after ADM disclosed plans to double its worldwide grain handling volumes. While the bigger stake is not directly related to that goal, Wilmar is ADM’s top customer, particularly in soyabeans.
“Our investment in Wilmar is one of the ways in which we are benefiting from growing consumer demand in Asia. Wilmar — Asia’s leading agribusiness — is a strategic partner and one of our largest customers,” ADM said.
Wilmar was not immediately available for comment.
In June, ADM took full ownership of Alfred C Toepfer International by purchasing the remaining 20 per cent of the German trading house it did not already own for $157m. It also holds a near 20 per cent stake in GrainCorp of Australia, after Canberra blocked a takeover bid late last year.
Robert Moskow, analyst at Credit Suisse, said it was pursuing a “capital-light” strategy and “expanding its distribution and destination markets” as it sought to double its grain handling business in four to seven years.