Archer Daniels Midland Plans to Sell Fertilizer, Chocolate Businesses -- 2nd Update

By Jacob Bunge 

Archer Daniels Midland Co. agreed to sell its Brazilian fertilizer business to Mosaic Co. for $350 million and could sell its global chocolate business within months, executives said Tuesday.

ADM, among the world's largest traders and processors of corn, soybeans and other crops, also said it would buy the remaining shares of a European grain business in which it has been an investor since 2002, extending the company's international reach following a failed acquisition in Australia last year.

"We are committed to ongoing portfolio management to realize value from our businesses and to deploy our capital where it can best improve returns," ADM Chief Executive Patricia Woertz said in a statement.

ADM's sale of its fertilizer distribution business in Brazil and Paraguay will increase Mosaic's production capacity in the countries by 60%. Mosaic, based in suburban Minneapolis, is one of the world's largest fertilizer producers.

The deal between Mosaic and ADM, of Decatur, Ill., includes four blending and warehousing facilities in Brazil and one in Paraguay, adding to Mosaic's seven existing plants in Brazil. The all-cash deal assumes the delivery of $150 million in working capital at closing, the companies said.

Mosaic CEO James Prokopanko said in a statement that the deal complements his company's other recent moves, including its $1.4 billion purchase of rival CF Industries Holdings Inc.'s phosphate-fertilizer operations.

ADM decided to sell the business due to intensifying competition and the investment required, according to a statement.

Separately, ADM said it would pursue a sale of its global chocolate business after negotiating for months with a potential buyer to sell both its cocoa-pressing and chocolate businesses. Those discussions fell through after the parties couldn't come to terms on a valuation, ADM President Juan Luciano said in an interview. "It ended up being too complicated of a deal," he said.

Instead, ADM will sell its global chocolate-making business, which Mr. Luciano estimated ranks among the world's five largest. The company will retain the majority of its cocoa-pressing operations.

Prospects for the chocolate business have improved in recent months. The International Cocoa Organization forecasts demand for cocoa will exceed global production during the season that ends Sept. 30, the second consecutive season of deficit, lifting cocoa prices.

Several buyers have approached ADM over the past year about deals for the chocolate business, Mr. Luciano said, and the company could divide the business into pieces for multiple buyers to secure the best price.

An ADM spokeswoman said Bank of AmericaMerrill Lynch and law firm Jenner & Block are advising the company on the planned sale.

ADM's chocolate-making operations include facilities in the U.S., Canada, the U.K., Belgium and Germany.

ADM, which last year posted nearly $90 billion in revenue, also plans to buy the 20% of Alred C. Toepfer International that it doesn't already own for about $115 million. The company will acquire a stake held by Union InVivo, a Paris-based grain and seed company that has held the position since 2010.

ADM acquired 80% of Toepfer, based in Hamburg, Germany, in 2002.

Toepfer maintains offices in Europe, Africa, Asia and Australia as well as North and South America, and has helped extend ADM's reach into international grain markets. Owning the remainder of the business would help ADM sell more services to customers who buy grain from the Toepfer unit, Mr. Luciano said.

The deal comes after the Australian government in November blocked ADM's planned $2.7 billion takeover of GrainCorp Ltd., a Sydney-based grain company that would have provided ADM with an enlarged platform from which to sell products into China and other Asian markets.

Mr. Luciano said earlier this month that the company intends to increase its 19.9% stake in GrainCorp, after Australian officials said they would likely allow ADM to own up to 24.9% of the company.

Leslie Josephs and John Kell contributed to this article.

Write to Jacob Bunge at [e-mail]

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