Archer Daniels Completes Toepfer Acquisition - Analyst Blog

Archer Daniels Midland Company ADM, last week announced that it has successfully completed the acquisition of the remaining 20% minority stake of Alfred C. Toepfer International from Union InVivo. Going ahead with its ongoing portfolio management, Archer Daniels had first revealed its intension of buying the stake on Apr 15, 2014.

Archer Daniels paid €83 million or approximately $115 million for the remaining 20% stake of Toepfer International. This world's largest corn producing company has been accumulating the stake of Toepfer International since 2002 and had acquired 80% of shares before the recent transaction.

Operating worldwide through a network of 37 offices, Toepfer International specializes in trading agricultural products such as biomass, pulses, feedstuffs, oilseeds, grains, vegetable oils, and fertilizers; providing supply chain solutions such as risk management, logistics, quality management, finance and market analysis. Apart from this, the company provides inland, river and export facilities in the United States, Argentina, Hungary, Bulgaria, Romania, Canada, and Ukraine.

The full integration of Toepfer International operations into Archer Daniels will facilitate the latter to provide full value chain services i.e. from origination to destination of Agricultural products. We believe the strategic initiative will enhance Archer Daniels' global origination network as well as customer services thereby offering a strong upside potential to the company in the long run.

We have observed that Archer Daniels is undertaking strategic steps to manage its business portfolio, which is expected to help in realizing value from its businesses and investing the same in best possible resources to enhance returns. This is evident from the company's recent move of vending its South American fertilizer business to The Mosaic Company which is expected to increase returns and help maintain amicable relationship with cultivators.

Moreover, Archer Daniels has finally hired advisors to ease sale of the chocolate business and has decided to keep the cocoa press assets. Archer Daniels has observed that the cocoa press business is picking momentum due to improvement in crop supplies and believes that there is immense growth potential in cocoa press, which is likely to help it in meeting its return objectives.

Archer Daniels Midland is a major global food processing company. It processes oilseeds, corn, wheat, cocoa and other foodstuffs. It is also a giant manufacturer of vegetable oil, protein meal, corn sweeteners, flour, biodiesel, ethanol and other value-added food and feed ingredients. Moreover, the company has a worldwide grain elevator and transportation network for procurement, storage, cleansing and transportation of agricultural commodities.

Other Stocks Worth Considering

Archer Daniels currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the agricultural products industry include Fresh Del Monte Produce Inc. FDP which carries a Zacks Rank #1 (Strong Buy) along with Adecoagro S.A. AGRO and Syngenta AG SYT both carrying a Zacks Rank #2 (Buy).

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