October 16, 2015 / 5:28 PM / 2 years ago

UPDATE 1-Olam completes acquisition of ADM's cocoa business

3 Min Read

* Olam becomes top tier supplier to chocolate industry

* Brazil cocoa assets seen among key acquisitions (Adds quotes, background)

By Sarah McFarlane and Nigel Hunt

LONDON, Oct 16 (Reuters) - Olam International has completed the acquisition of the global cocoa business of Archer Daniels Midland Co. in a deal valued at $1.2 billion, the companies said on Friday.

The deal, first announced in December last year, catapults the Singapore-based commodities firm into the top tier of global suppliers to the chocolate business.

It boosts Olam's processing capacity to about 700,000 tonnes, behind only Barry Callebaut and Cargill Inc. with operations in major producing countries Ivory Coast, Nigeria, Ghana and Brazil as well as coming markets in Europe, the United States, Canada and Asia.

The combined entity will be looking to source from around 850,000 tonnes to 900,000 tonnes annually, Gerry Manley, Olam's head of cocoa said.

"We want to be really focused on the cocoa products market and supplying the chocolate industry, cocoa powder users, and really not set ourselves up in competition to chocolate manufacturers," Manley said.

"Most importantly of all for us from a producing country point of view and indeed a consuming country point of view, we get Brazil. It's the largest producing country where Olam has not been involved before."

Manley said Olam was also looking at increasing its interest in the Japanese market.

Japanese trading house Mitsubishi Corp bought a 20 percent stake in Olam in August.

"Clearly in the joint venture Mitsubishi are looking to see how they can increase the links with Olam in Japan and indeed understand more about the various agricultural businesses that we're involved with," he said.

Olam's cocoa business will continue to be headquartered in London although the company has opened a new office outside of Geneva where the Switzerland-based staff from ADM will be relocating.

Olam said the acquisition was expected to be earnings, returns and cash flow accretive in the first full year of consolidation.

The company said the acquired business was expected to generate earnings before interest, tax, depreciation and amortisation (EBITDA) of between $180 million and $200 million including synergies in 2018. (Reporting by Sarah McFarlane and Nigel Hunt; editing by Adrian Croft)

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