Olam International Limited has completed the acquisition of ADM’s cocoa business. The acquisition is valued at US$1,204.0 million, US$550.0 million in fixed assets and US$654.0 million in working capital subject to the usual purchase price adjustment. “The newly created entity Olam Cocoa offers breadth, depth and scalability – from origin sourcing, trading, risk management, value chain processing and supply chain solutions, to sustainability, research and development, and product innovation,” said the company.
Olam’s co-founder, Group Managing Director and CEO, Sunny Verghese said: “This is a transformation of an already strong, prioritised business platform with attractive market prospects that is poised to contribute significantly to group EBITDA by 2018.”
Cocoa is one of six, prioritised platforms identified ‘to invest and grow’ in Olam’s strategic plan. Prior to the completion of the deal, Olam’s cocoa business had already started to integrate its supply chain by investing in origin processing in Côte d’Ivoire and Nigeria, and in value-added midstream processing facilities in Spain and the UK. Olam Cocoa will now benefit from operating leverage and scale. The combined business optimises its procurement, manufacturing, logistics, warehousing, trading and risk management systems, and working capital utilisation by integrating its entire operation. Olam expects to derive synergy impact of between US$35.0 and US$40.0 million by 2018.