Olam agrees to buy ADM's cocoa business to create global firm

Buying one of the world's largest processors and suppliers of cocoa liquor, powder and butter, Olam will secure eight factories stretching from the Ivory Coast to Singapore with total capacity of 600,000 tonnes per year.

Combined with Olam's five bean grinding facilities and its global trading operations, the deal will create one of the largest players in the 4-million tonne industry, competing with Barry Callebaut and Cargill [CARG.UL].

Olam Co-Founder, Group MD and Chief Executive Office, Sunny Verghese, said in a statement the deal was a "transformational opportunity" for the company, which has been revitalized following the takeover of Singapore sovereign wealth fund Temasek [TEM.UL] earlier this year.

The acquisition will also be seen as a bet on long-term growth in demand in Asia, where consumers' appetites for candy and cookies is burgeoning.

For ADM, the deal comes just months after offloading its smaller underperforming chocolate business to rival Cargill [CARG.UL] for $440 million, and dropping plans to sell its cocoa operations.

A spokeswoman for the Chicago-based company said it had not been looking to sell the business.

Cargill had been the front runner to buy the combined cocoa and chocolate business, but experts said a deal of that size would have raised regulatory concerns, particularly in Europe.

Olam will finance the purchase through a combination of cash and existing debt facilities, it said.

(Reporting by Josephine Mason; Editing by James Dalgleish, Bernard Orr)

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