Dive Brief:
- Archer Daniels Midland Co. is back on the hunt for M&A opportunities as the commodities giant confronts higher borrowing costs in an inflationary environment.
- Acquisitions will become "more important" for the grain trader's nutrition and commodity businesses, CEO Juan Luciano said earlier this month at the J.P. Morgan U.S. All Stars Conference in London.
- ADM is looking to strengthen its technological capabilities and round out its nutrition portfolio in emerging markets, its chief executive said.
Dive Insight:
After years of "trying to acquire as little as possible" and to focus on organic growth, Luciano said higher operating and lending costs are pushing ADM to reconsider.
"I think the last 10 years were bad for ADM from a M&A perspective because ADM has a strong financial position and balance sheet," the CEO said. "And to be honest, money was free."
The grain trader made at least two buys over the summer, including a glycerin producer in Brazil. ADM also purchased Prairie Pulse, which owns a pulse crop cleaning, milling and packaging facility in Canada that will turn lentils, chickpeas and peas into shelf-stable products for international markets.
The company is focused on boosting its presence outside of North America and Europe. Luciano said ADM is "underrepresented in the emerging markets." Acquisitions are expected to play a central role in helping the commodities trader enhance its market share in these areas.
For the most part, however, ADM will be straying away from large acquisitions, which Luciano said "brings a lot of impurity." The company is looking for partners that can offer innovative technology, talented workers and a reasonable valuation.
"We are very happy with our footprint in general, our representation in the world. So, we don't need to add any massive stuff," Luciano said. "If there is something that is an opportunity that realistically makes sense … we will flex our M&A capability.”
