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ADM to acquire Wild Flavors

$3.1 billion acquisition will add flavor systems to ADM’s portfolio of specialty ingredients

Archer Daniels Midland Co. (ADM), Decatur, Ill., announced its plans to acquire Wild Flavors GmbH, Zug, Switzerland, giving ADM the ability to offer food and beverage companies a comprehensive suite of systems to enhance and improve their products, the company says.

In an all-cash transaction valued at more than $3.1 billion enterprise value, ADM will pay nearly $3 billion to Wild Flavors shareholders Dr. Hans-Peter Wild and funds affiliated with Kohlberg Kravis Roberts & Co. L.P., and assume approximately $100 million of net debt. The transaction is contingent upon regulatory approvals and is expected to close by the end of the year.

“This acquisition expands ADM’s ability to serve customers’ evolving needs today and well into the future,” said ADM Chairman and Chief Executive Officer Patricia Woertz in a statement. “Natural flavor[s] and ingredients [are] one of the largest and fastest-growing consumer trends in both developed and emerging markets, and Wild Flavors is the world’s leading provider of natural flavor systems to the food and beverage industry.”

Wild Flavors, which boasts more than 3,000 customers worldwide and has estimated 2014 net revenues of about $1.4 billion, offers food and beverage companies full flavor and ingredient solutions; fruit juice concentrates and blends; and other food and beverage ingredients, including natural flavors and extracts, mint oils and flavors, colors from natural sources, sweetening systems, seasonings, specialty ingredients, taste modifiers, and fermentation technologies.

“Together, ADM and Wild Flavors will create one of the leading flavor and specialty ingredient companies in the world, with sales approaching $2.5 billion and significant room to grow,” Woertz said in a statement. “Wild Flavors will be able to reach more customers with an expanded portfolio of innovative ingredients, and ADM, with our own sizeable specialty ingredient business, will have an enhanced platform for the commercialization of our higher-margin food and wellness ingredients.

“Together, we will be uniquely positioned to offer a broad range of customers — from the largest [consumer packaged goods companies] to fast-growing innovators — comprehensive systems-based solutions for food, beverage and personal care products,” she continued. “With our combined global networks; world-class research and innovation capabilities; Wild Flavors’ natural flavor systems; and ADM’s texture, nutrition and functional solutions, we will create an unmatched capability to respond to local consumer preferences and offer complete food solutions that taste great.

“The addition of Wild Flavors balances and extends our value chain,” Woertz concluded. “It is consistent with our long-term strategy to diversify the crops we process and expand and diversify our product portfolio. It complements the ingredient, organic-growth investments we’ve recently made, including our Brazil protein complex and soluble-fiber expansion in China, and it is consistent with actions we’ve taken to dampen the volatility of our earnings mix and deliver on our commitment to profitable growth. The acquisition will meet our return objectives, with estimated cost and revenue synergies of [$136] million by year three.”

Dr. Hans-Peter Wild, chairman of Wild Flavors GmbH, added in a statement: “I am very pleased by ADM’s acquisition of Wild Flavors and the future business we will build together. Wild Flavors’ unique natural flavors strength and total systems approach will create a very strong and positive development platform within ADM for our customers as we continue to drive innovation in the food and beverage industry. With the strong financial resources and expanded customer base, product offering and global footprint, I am confident Wild Flavors will be well-positioned for growth.”
 

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