Archer Daniels Midland Co. has agreed to acquire several assets of Eaststarch C.V., ADM’s 50-50 joint venture with Tate & Lyle. Under the terms of the agreement, ADM will take full ownership of corn wet mills in Bulgaria and Turkey, and will own a 50% stake in a wet mill in Hungary. In return, Tate & Lyle will receive a cash consideration of €240 million, subject to customary closing adjustments, including for net cash and working capital, and take full ownership of the Eaststarch facility in Slovakia.
“Our corn business is creating shareholder value through geographic expansion and the increasing diversification of our product portfolio,” said Chris Cuddy, president of ADM’s corn processing business unit. “With the coming end of sugar production quotas in the E.U., the artificial cap on cereal-based sweeteners will be lifted. There will be tremendous opportunities in the new European sweetener market, including a particularly strong opening in Eastern Europe, where there is less sugar production. By acquiring a greater ownership share in these corn assets, ADM will be able to better serve our customers as they meet this expanding European demand for sweeteners. At the same time, we are improving our capabilities to meet customer needs in the growing market for starch in Europe.”
The Bulgaria, Turkey and Hungary facilities have a combined daily grind capacity of approximately 200,000 bus. The facilities produce primarily sweeteners and starches. The Hungary facility also produces ethanol for fuel, beverage and industrial uses. The acquisition will increase ADM’s global grind capacity for corn 7.5%, to approximately 3 million bus per day.
“The value of this transaction reflects the anticipated decline in E.U. sugar prices,” Mr. Cuddy added. “We expect this deal to meet our returns objectives.”
As part of the transaction, ADM said it will supply Tate & Lyle with crystalline fructose from the Turkey facility. In addition, Tate & Lyle will use ADM as its exclusive agent for the sale of liquid sweeteners and industrial starches produced by its E.U. plants.
Eaststarch, a 50-50 joint venture between ADM and Tate & Lyle, was formed in 1992. It owns three corn wet mills — one in Slovakia, one in Bulgaria and one in Turkey — and 50% of a mill in Hungary. The venture deals primarily in corn sweeteners and starches.