‘Monster Acquisitions’ Aside, ADM Is On A Bite-Sized Buying Spree Under CEO Juan Luciano

ADM CEO and Chairman Juan Luciano.
ADM CEO and Chairman Juan Luciano.

While Archer Daniels Midland is not interested in making “monster acquisitions” at this time, that isn’t stopping one of the world’s largest agricultural processors and food ingredient providers from gobbling up smaller companies, says CEO and Chairman Juan Luciano.

“We feel we don’t need that monster transformational transaction,” Luciano told Reuters last month. “When credit becomes tighter, we might flex our balance sheet a little bit more, when there’s a little bit less competition.”

In the meantime, Chicago-based ADM has been on more of a bite-sized buying spree to expand its nutrition business, and is also exploring joint ventures in agricultural processing and other areas, he said.

This month the company closed its $1.8 billion deal for Neovia in Vannes, France, provider of value-added products and solutions for both production and companion animals.

“The addition of Neovia represents a major milestone in the execution of our strategic plan to become a global leader in nutrition,” Luciano said in a press release.

“This acquisition — our largest since we added WILD Flavors in 2014 — instantly creates a premier global leader in animal nutrition, while simultaneously providing a strong platform for future growth,” he said. “It meets our returns objectives, expands our geographic reach, and helps us continue to expand our portfolio and better serve our customers.”

The press release goes on to say that ADM is currently in the process of “the most extensive portfolio transformation in the company’s 115-year history,” significantly expanding its human and animal nutrition capabilities.

In the animal health and nutrition space, the company has made a series of expansions and investments in recent years, including:

• Building and renovating three specialty animal nutrition plants in China and four plants in the U.S.

• Acquiring pet treat manufacturer Crosswind Industries

• Expanding pet food ingredient manufacturing capabilities in North America Investing in state-of-the-art value added complete feed manufacturing facilities in North America

• Entering into a partnership with China-based Qingdao Vland Biotech Group and building a cutting-edge research lab in California to develop and commercialize animal feed enzymes;

• Purchasing Protexin, a leading provider of probiotic supplements for human wellness as well as a variety of animal markets, including aquaculture, equine, livestock and companion animals.

But that’s not all: last month ADM announced that the company had signed an agreement to purchase the remaining 50 percent stake of Gleadell Agriculture Ltd., that had been jointly owned by ADM and InVivo, including Gleadell’s wholly owned subsidiary Dunns (Long Sutton) Ltd. The transaction increased ADM’s origination, storage and destination marketing capabilities in the UK.

Also last month, the company made a deal to buy Florida Chemical Co., a division of Flotek Industries specializing in citrus-based flavors and fragrances, and one of the world’s largest providers of citrus oils and ingredients.

And in October, ADM and Cargill Inc. inked an agreement to form a technology joint venture, Grainbridge LLC, which will provide grain marketing decision support, e-commerce and account management software for North American farmers.

All of these deals are expected to significantly impact ADM’s bottom line, Luciano said in the company’s fourth-quarter earnings call.

“We will continue working to deliver shareholder value in 2019 by vigorously executing our strategy, including aggressively working to improve execution in select businesses, accelerating our Readiness efforts to deliver increasing value, and harvesting the contributions from our acquisitions and organic growth investments,” he said. “By continuing to pull the levers under our control, we are positioning ourselves to grow profits and returns in 2019 and beyond.”

He’s No. 46 on Chief Executive and RHR International’s CEO1000 Tracker, a ranking of the top 1,000 public/private companies.

Juan Luciano, CEO of ADM

Headquarters: Chicago, IL

Age: 57

Education: Instituto Tecnológico de Buenos Aires (B.A. and M.B.A.)

First joined company: 2015

Prior to joining Publix: Dow Chemical

Named CEO: 2016