Moving ahead with its strategy of enhancing returns by focusing on growing its core business and making strategic acquisitions, Archer Daniels Midland Company ADM penned a deal to buy a privately-owned oil bottling company, AOR N.V. Though the financial terms of the deal were not disclosed, it is subject to regulatory approvals.
A leading company in the European packaged oils industry, AOR is a bottler and distributor of edible oils in Europe. The customers of this Antwerp, Belgium-based company are spread across Europe, mainly in the northwest regions including Belgium, the Netherlands and Luxembourg. The company also has a substantial export business. The primary brands sold by the company include Oilio and Coroli.
The acquisition of this European company is expected to open doors for Archer Daniels’ entry into the continental European retail and foodservice markets. Additionally, it will provide avenues to export value-added products across the globe. This will help the company to expand its product offerings as well as its customer base in Europe, providing opportunities for enhanced returns.
Apart from expanding into newer markets, this acquisition is likely to boost the demand for oils produced by Archer Daniels’ European units.
Archer Daniels has been strategically undertaking steps to manage its business portfolio, as evident from its actions involving the smooth integration of the WILD Flavors acquisition, the divestment of its South American fertilizer business and agreements to sell its global cocoa business to Olam and chocolate business to Cargill.
These are likely to help the company in realizing value from its businesses and invest the same in the best possible resources to enhance returns and minimize earnings volatility.
Archer Daniels currently holds a Zacks Rank #3 (Hold). Better-ranked stocks in the same sector include Adecoagro S.A. AGRO and Amira Nature Foods Ltd. ANFI, both carrying a Zacks Rank #2 (Buy). Another stock worth considering in the related food industry is SUPERVALU Inc. SVU with a Zacks Rank #2.
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