MARKET DEVELOPMENT
ADM Boosts Wilmar Stake as Asian Palm Oil Demand Rises
ADM Boosts Wilmar Stake as Asian Palm Oil Demand Rises
21/10/2015 (Bloomberg) - Archer-Daniels-Midland Co. raised its stake in Wilmar International Ltd., the Singapore-based company that trades almost half the world’s palm oil, as demand for the commodity used in bread to shampoo grows in Asia.
ADM, the world’s largest corn processor, “opportunistically acquired shares of Wilmar in the open market” recently, spokeswoman Jackie Anderson said in an e-mailed statement. Tuesday’s purchases represented about 22 percent of the total volume of Wilmar traded on the Singapore Exchange, according to Chicago-based ADM, which declined to disclose its current total stake and said it’s not a controlling stake. It held an 18 percent stake as of March 10, according to data compiled by Bloomberg.
ADM, which makes food, fuel and feed from corn, soybeans and other crops, has tried to diversify beyond the U.S. and boost its presence in the Asian market. An offer to buy Australia’s GrainCorp Ltd. to ship agricultural commodities to growing populations in Asia and Middle East was rejected by the government two years ago.
“This is another way for us to drive results for our shareholders,” Anderson said. “Our investment in Wilmar is one of the ways in which we are benefiting from Asian consumers’ growing and evolving food demand driven by rising populations and incomes.”
Strategic Partner
Wilmar is a “strategic partner” and one of the company’s biggest customers, Anderson said. ADM has worked with Wilmar for about two decades. It earlier had joint ventures and then in 2006 contributed direct holdings in its Wilmar-related agriculture processing joint ventures in China to Wilmar International Ltd. in exchange for shares.
The stock is a good buy given the strength of the U.S. dollar and because Wilmar is trading below book value, and ADM expects the return on its investment to exceed its long-term weighted average cost of capital of 8 percent, Anderson said.
“This move enhances our ability to benefit from growing consumer demand in Asia,” Anderson said.
On Tuesday, Wilmar closed in Singapore up 8.9 percent at S$3.17, the biggest gain in more than six years. ADM fell 0.6 percent to $45.70 at the close in New York.
Wilmar, responding to inquiries about its “unusual” trading activity, said in a separate statement that it was informed about the stock purchases by one of its directors, who is from ADM.
ADM said it used cash to finance the transaction.
ADM, the world’s largest corn processor, “opportunistically acquired shares of Wilmar in the open market” recently, spokeswoman Jackie Anderson said in an e-mailed statement. Tuesday’s purchases represented about 22 percent of the total volume of Wilmar traded on the Singapore Exchange, according to Chicago-based ADM, which declined to disclose its current total stake and said it’s not a controlling stake. It held an 18 percent stake as of March 10, according to data compiled by Bloomberg.
ADM, which makes food, fuel and feed from corn, soybeans and other crops, has tried to diversify beyond the U.S. and boost its presence in the Asian market. An offer to buy Australia’s GrainCorp Ltd. to ship agricultural commodities to growing populations in Asia and Middle East was rejected by the government two years ago.
“This is another way for us to drive results for our shareholders,” Anderson said. “Our investment in Wilmar is one of the ways in which we are benefiting from Asian consumers’ growing and evolving food demand driven by rising populations and incomes.”
Strategic Partner
Wilmar is a “strategic partner” and one of the company’s biggest customers, Anderson said. ADM has worked with Wilmar for about two decades. It earlier had joint ventures and then in 2006 contributed direct holdings in its Wilmar-related agriculture processing joint ventures in China to Wilmar International Ltd. in exchange for shares.
The stock is a good buy given the strength of the U.S. dollar and because Wilmar is trading below book value, and ADM expects the return on its investment to exceed its long-term weighted average cost of capital of 8 percent, Anderson said.
“This move enhances our ability to benefit from growing consumer demand in Asia,” Anderson said.
On Tuesday, Wilmar closed in Singapore up 8.9 percent at S$3.17, the biggest gain in more than six years. ADM fell 0.6 percent to $45.70 at the close in New York.
Wilmar, responding to inquiries about its “unusual” trading activity, said in a separate statement that it was informed about the stock purchases by one of its directors, who is from ADM.
ADM said it used cash to finance the transaction.