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Archer Daniels Midland to buy Wild Flavors for $3 billion
2:34 PM MDT | July 10, 2014 | Natasha Alperowicz
Archer Daniels Midland (ADM) today announced that it is acquiring Wild Flavors GmbH (Zug, Switzerland), for an enterprise value of approximately €2.3 billion ($3.13 billion). In an all-cash transaction, ADM will pay €2.2 billion to Wild Flavors shareholders Hans-Peter Wild and funds affiliated with Kohlberg Kravis Roberts (KKR), and assume approximately €100 million of net debt. The acquisition, which is subject to regulatory approvals, is expected to close by year end.
“This acquisition expands ADM’s ability to serve customers’ evolving needs today and well into the future,” said ADM chairperson and CEO Patricia Woertz. “Natural flavor 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 has more than 3,000 customers worldwide and estimated 2014 net revenues of about €1 billion. It offers food and beverage companies full flavor and ingredient solutions, fruit juice concentrates and blends, and other food and beverage ingredients, including natural flavors, natural food colors, sweetening systems, seasonings, specialty ingredients, taste modifiers, and fermentation technologies. Its management offices with production sites are located at Heidelberg-Eppelheim, Germany; and Erlanger, KY. Thirteen further production sites are located in Europe, the US, Canada, China, Japan, India, Brazil, and Dubai.
“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. “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 products groups] to fast-growing innovators—comprehensive systems-based solutions for food, beverage and personal care products. With our combined global networks, world-class research & 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."
Woertz added: "The addition of Wild Flavors balances and extends our value chain. 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 €100 million by year three.”
ADM plans to retain the Wild Flavors name. It plans to establish a new business unit called Wild Flavors and Specialty Ingredients. The new unit will include many of the group’s specialty ingredients.
Johannes Huth, head of KKR Europe, Africa and Middle East said: “Wild Flavors represented for KKR the opportunity to partner with an innovative family entrepreneur in developing a high-quality, R&D driven, Germany-based Mittelstand business. The partnership was tailored to the family ownership and the vision of Dr. Wild to develop Wild Flavors into a globally integrated producer of flavors and flavor systems. The substantial growth and global expansion of Wild Flavors over these past years helped make the company an attractive and valuable partner for an industry-leading global company like ADM.”
Barclays is acting as financial advisor to ADM. Skadden, Arps, Slate, Meagher & Flom is acting as the legal advisor.