Olam and the chocolate factory: US$1.2b ADM Cocoa acquisition finalised

The deal is expected to generate US$200m by 2018.

The agri-business firm took a giant leap for its goal to satisfy the increasing demand for full integration within the supply chain as the acquisition fuses Olam’s cocoa bean sourcing with ADM Cocoa’s processing--creating Olam Cocoa.

According to a statement by Olam, the new subsidiary will benefit from operating leverage and scale.

“The combined business optimises its procurement, manufacturing, logistics, warehousing, trading and risk management systems, and working capital utilisation by integrating its entire operation,” Olam said.

Olam had also started to invest in origin processing in Côte d’Ivoire and Nigeria, and in value-added midstream processing facilities in Spain and the UK.

“By maximising our complementary capabilities in a fully integrated business, we can meet the needs of our 2,000 customers, from pure bean buyers to international brands, both now and in the future,” said Gerard Manley, CEO of Olam Cocoa.

“Olam expects the acquired business to generate an EBITDA of between US$180.0 and US$200.0 million including synergies at steady-state in 2018. This represents a 20-22% growth over the results for the year ended June 30, 2014,” Olam said.