ADM confirms talks over sale of $2bn cocoa business unit

US-based agri-processing company Archer Daniels Midland (ADM) has confirmed that it is in negotiations to sell its cocoa business, which is estimated to be worth $2bn.

ADM has consulted a number of potential buyers over the potential sale of its cocoa division, reported Financial Times citing sources familiar with the matter.

ADM spokesperson Jackie Anderson confirmed that the company is currently engaged in discussions about the potential sale of its cocoa business.

"Consistent with our commitment to create shareholder value, we regularly evaluate strategic options and maintain ongoing dialogue with other agribusiness companies to explore opportunities," Anderson said.

Commenting on the current talks, Anderson added: "These discussions are ongoing, and there can be no assurance that they will result in the signing of a transaction or definitive agreement."

The sale will allow the US-based company to focus on its agricultural portfolio such as corn and oilseeds, including soya beans, at a time when demand from emerging markets, including China, is increasing significantly.

The proceeds from a sale could be used for the purchase of Australian grain handler GrainCorp. ADM is awaiting approval from the Chinese regulators for its $3bn GrainCorp takeover.

ADM’s cocoa and other processing divisions reported net sales of $3.7bn in 2012, representing 4% of the total revenues.

ADM Cocoa is one of the world’s leading processors and suppliers of cocoa and chocolate products.

The company caters to customers in the confectionery, bakery, dairy and other food industries and helps create products that satisfy a host of flavour, texture and colour requirements.

The cocoa processing industry, which converts beans into cocoa butter and powder, is lead by Swiss group Barry Callebaut and US-based Cargill and ADM, which together represent nearly two-thirds of the market.

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Image: The sale of the cocoa business will allow ADM to focus on its agicultural business. Photo courtesy of Archer Daniels Midland Company.