Markets

Archer Daniels to Fuel Growth with Moroccan Facility Buyout

A generic image of a line graph
Credit: Shutterstock photo

In an attempt to solidify its worldwide sweetener footprint, Archer Daniels Midland CompanyADM announced plans to buy a corn wet mill, based in Casablanca, Morocco from Tate & Lyle.

The acquisition of this wet mill, which manufactures glucose and local starch, is expected to close in the first half of 2016.

This facility caters to local and international consumers in the food, paper, feed and corrugated board industries, and is the leading starch and sweetener provider in Morocco. In fact, the facility also serves Mediterranean export markets. Consequently, this deal is likely to extend Archer Daniels' reach to the Moroccan and Mediterranean markets.

Archer Daniels has been on the growth via expansion path for a while now. The company has been constantly undertaking steps to manage its business portfolio through acquisitions, divestitures or formation of joint ventures.

In fact, as part of its 50-50 joint venture with Tate & Lyle, Eaststarch C.V., Archer Daniels acquired full ownership of two corn wet mills in Bulgaria and Turkey, along with a 50% stake in the Hungary wet mill, in Apr 2015. Also, Tate & Lyle decided to make Archer Daniels the exclusive agent for selling liquid sweeteners and industrial starches produced by its EU plants.

Apart from this, Archer Daniels has also spread its reach in the Chinese markets by acquiring the Meiweiyuan Biotechnology Co sweetener facility, located in the central Chinese province of Hubei, and another sweetener facility in North China at the port of Tianjin.

We believe that these acquisitions enable Archer Daniels to cater to the growing demand for sweeteners, and also enhance its capability to satisfy the increasing need for starch. Further, these buyouts are expected to strengthen the company's portfolio, improve its knowledge, help focus on consumers and drive returns.

Zacks Rank

Archer Daniels currently carries a Zacks Rank #5 (Strong Sell). Better-ranked stocks in the consumer staples sector include Adecoagro S.A. AGRO , ConAgra Foods, Inc. CAG and Pinnacle Foods Inc. PF , each carrying a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

CONAGRA FOODS (CAG): Free Stock Analysis Report

ARCHER DANIELS (ADM): Free Stock Analysis Report

ADECOAGRO SA (AGRO): Free Stock Analysis Report

PINNACLE FOODS (PF): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

AGRO ADM CAG

Other Topics

Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More