Archer Daniels Midland Co. (NYSE:ADM), the world’s top corn crusher, said it will acquire Wild Flavors GmbH, a Switzerland-based maker of natural food ingredients, for about $3 billion cash.
Wild Flavors is being purchased from shareholders Hans-Peter Wild and funds affiliated with Kohlberg Kravis Roberts & Co. LP, Decatur, Illinois-based ADM said in a statement today. The buyer will also assume net debt of about 100 million euros.
ADM said it would keep the Wild Flavors brand but create a new business unit called Wild Flavors and Specialty Ingredients.
ADM outbid Japan’s Ajinomoto Co. (TYO:2802) for the maker of the Capri Sun juice drink and natural flavorings for beverages and food, people familiar with the matter told Bloomberg last week.
The takeover will help ADM diversify away from grain processing and gain a bigger foothold in overseas markets for food and drink made with more natural raw materials.
Wild Flavors competes with Germany’s Symrise AG and Switzerland’s Givaudan SA. It has production sites across Europe, the Middle East, Asia and the Americas. The company provides flavorings, colors and ingredients to more than 3,000 customers in the food and beverage industries.
Patricia Woertz, ADM’s chairman and chief executive, said the deal would create a market leader in the natural ingredient and flavouring sector, “with sales approaching $2.5bn and significant room to grow”.
“Together, we will be uniquely positioned to offer a broad range of customers . . . comprehensive systems-based solutions for food, beverage and personal care products,” she said in a statement.
The deal also taps into a global trend for eating "natural" foods—products made without artificial colorings and flavorings. Food labeled "natural'' had more than $40 billion in U.S. retail sales in 2013 according to data from Nielsen, second only to food claiming to be low in fat.
"Natural flavor and ingredients is one of the largest and fastest-growing consumer trends in both developed and emerging markets," Woertz said.
The deal, which is contingent on regulatory approvals, may close by year end.
Barclays is acting as financial advisor to ADM.
Shares of Archer Daniels closed up 1 percent at $45.77 on July 3. The market was closed on July 4 for the Independence Day holiday.