PARIS, July 2 (Reuters) - ADM is in exclusive talks to take over animal nutrition business Neovia for 1.5 billion euros ($1.75 billion), marking a new step in the U.S. agricultural giant’s strategy to expand in the fast growing feed sector.
Neovia is majority owned by French cooperative group Invivo. Investment group Eurazeo also has a 17 percent stake in the company.
ADM and its rivals such as Bunge, Cargill and Louis Dreyfus Company have been forced to review their approach in recent years as a global oversupply of food commodities has made it tough to turn a profit on their core business: buying, processing, and selling soy, corn and wheat.
Chicago-based ADM had said in March it was shifting its business segments into four new units - carbohydrate solutions, nutrition, oilseeds and origination - to differentiate its offerings to customers.
“We were happy with our animal feed activities but it was too local, mainly based in North America and with a little in Mexico and China. We decided that if we wanted to expand we needed a more global approach,” ADM President Europe, Middle East and Africa Pierre-Christophe Duprat told Reuters.
“The opportunity came with Neovia. There are not many actors on the market and...their product and geographical mix suited us.”
Invivo is France’s largest cooperative group, gathering 206 cooperatives and 300,000 farmers, and employing 10,200 people in 34 countries. Sales stood at 5.5 billion euros in 2016/17.
Of this, Neovia had sales of 1.7 billion in 2017 and employs 8,200 staff.
$1 = 0.8591 euros Reporting by Sybille de La Hamaide; Editing by Sudip Kar-Gupta