In line with its strategy of achieving growth via acquisitions, Archer-Daniels-Midland Company ADM announced a deal with California Gold Almonds for the purchase of the latter’s tree nut and seed processing assets and operations in Modesto, CA.
Per the terms of the transaction, the Modesto processing plant will be acquired on lease, while Archer Daniels will buy ownership rights of the plant’s assets, which include the processing equipment.
The Modesto facility, which is capable of packaging, dicing, steam pasteurizing, slicing, roasting, and milling, is likely to enhance Archer Daniels’ existing nut operations. The company already operates similar facilities at the West Coast, in Lodi and Stockton. These versatile plants can process a wide assortment of nuts, like almonds, cashews, Brazil nuts, pecans, pistachios, hazelnuts, walnuts and macadamias.
Management believes this acquisition is a win-win for its WILD Flavors and Specialty Ingredients business as worldwide demand for nuts, particularly almonds, macadamias, pumpkin seeds, cashews, along with other healthy, on-trend nuts and seeds, has been on the rise. Moreover, it expects the production of these nuts to maintain an uptrend in order to cater to the growing demand. This will enable the company to be ready to meet the growing consumer demand and augment sales.
Archer Daniels’ Specialty Commodities business is a leading processor, distributor and originator of healthy ingredients like fruits, nuts, legumes, seeds and old grains. Further, it works with a global chain of suppliers for sourcing organic and natural ingredients. It then distributes them to consumers in the ice cream, snack, bakery, nutrition bar, health food, pet food and bird food markets.
Archer Daniels is undertaking strategic steps to manage its business portfolio. These measures are likely to help the company in realizing value from its businesses and invest the same in the best possible resources to enhance returns.
Zacks Rank
Archer Daniels currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the consumer staples sector include Adecoagro S.A. AGRO, Campbell Soup Company CPB and The WhiteWave Foods Company WWAV, each with a Zacks Rank #2 (Buy).
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