Blog: Dean BestWhy Wild Flavors could provide ADM with natural shelter from volatility

Dean Best | 7 July 2014

Argibusiness giant Archer Daniels Midland today (7 July) announced its biggest acquisition to date with a US$2.99bn deal to buy Wild Flavors and will be hoping the Swiss firm's portfolio of natural ingredients can help offset the volatility that can hit the US group's core business.

While just-food's focus is reporting on the developments of packaged food manufacturers, we do keep a keen eye on major M&A among the suppliers to those companies and ADM's move for Wild will have been noted in food industry boardrooms worldwide.

In an all-cash transaction, ADM will pay EUR2.2bn (US$2.99bn) to Wild Flavors' shareholders Dr. Hans-Peter Wild and funds affiliated with private-equity firm Kohlberg Kravis Roberts & Co. ADM will also assume approximately EUR100m of net debt. The transaction is subject on regulatory approvals and is expected to close by the end of the year.

ADM is one of the world's largest grain traders and the deal for Wild Flavors is its first move into the flavours market. It comes as consumers are showing increasing interest in natural products.

"Natural flavour and ingredients is one of the largest and fastest-growing consumer trends in both developed and emerging markets, and Wild Flavors is the world's leading provider of natural flavour systems to the food and beverage industry," ADM chairman and CEO Patricia Woertz said.

And the deal is the latest in the natural ingredients sector. German flavours group Symrise announced a deal to buy French natural ingredients manufacturer Diana in April.

That month, ADM booked lower-than-expected first-quarter earnings, in part due to the US weather affecting profits from its agricultural services division.

Shares in ADM were up 0.94% at US$46.21 at 11:21 ET.

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