Consolidations in the cocoa business have been in the news for most of 2014. It’s all about leverage and scale, according to participants.

Here are four of 2014’s most newsworthy cocoa consolidations, to date.

Cargill - ADM

Most recently, on September 2, 2014, privately held Cargill said it would buy Archer Daniels Midland Company's (NYSE: ADM) global chocolate business for $440 million. The move was designed to give Cargill more leverage as a supplier to candy makers.

Following completion of the sale next year, Cargill would add three ADM chocolate factories in North American and three in Europe, giving it 24 chocolate and cocoa facilities that employing more than 3,000 people.

Candy makers Cargill sells to include Mars, Nestle (OTC: NSRGY) and Mondelez International Inc (NASDAQ: MDLZ).

The Cargill deal with ADM is just the latest of several industry acquisitions resulting in extensive consolidation among chocolate suppliers.

Lindt – Russell Stover

In July, Lindt & Spruengli (OTC: COCXF) said it would acquire Russell Stover Candies, making it the third largest chocolate producer in North America.

Lindt & Spruengli was already the largest producer of premium chocolate in the world. The Russell Stover acquisition adds to the company’s base operations, especially in North America.

Bloomberg reported that although the price was not disclosed, Lindt said the acquisition was the largest it has ever made.

Russell Stover, meanwhile, was the biggest U.S. maker of boxed chocolate. The company’s annual sales have reached $500 million. Total North American revenue for Lindt, the company said, would now exceed $1.5 billion.

Related Link: Is Cocoa The New Copper & Coal?

Ecom Agroindustrial - Armajaro Trading

The European Commission, in May, allowed the acquisition of investment firm, Armajaro Trading Limited by Ecom Agroindustrial Corp. of Switzerland. In order to approve the merger, the commission had to be convinced the transaction would not hurt competition in Europe.

Although the move will create one of the largest cocoa bean traders in the world, commission members concluded customers “would still have sufficient alternative suppliers in all markets concerned.”

Barry Callebaut – Biolands Group

Barry Callebaut (OTC: BYCBF), which had been purchasing all of Biolands’ top grade cocoa since 2000, completed purchase of the remaining 51 percent of Biolands Callebaut it did not own in February.

Daudi Lelijveld, vice president of sustainable cocoa at Barry Callebaut, said at the time, “The complete takeover of Biolands brings Barry Callebaut even closer to thousands of farmers committed to sustainable cocoa production.”

Barry Callebaut is the largest manufacturer of chocolate in the world.

At the time of this writing, Jim Probasco had no position in any mentioned securities.

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Monday, September 08, 2014