Singapore-based agri-business operating firm Olam International Limited has agreed to buy leading American peanut sheller, McCleskey Mills Inc (MMI), at an enterprise value of $176 million, the companies said.
The acquisition will be funded by a combination of internal accruals and existing debt facilities and the transaction is expected to be completed by the third quarter of the next financial year ( Q3 FY2015).
For Olam, which had been operating in the US peanut industry since 2007 through its acquisition of Universal Blanchers LLC (that specialises in toll blanching and ingredient manufacturing of peanuts), the latest deal is in line with its strategy to selectively invest in prioritised platforms, which includes ‘Edible Nuts’.
The deal also extends Olam’s participation in the US peanut value chain as MMI links its own procurement and origination infrastructure with Singapore-based agri-business operating firm’s midstream processing capabilities, thereby completing Olam’s value chain presence from farm gate to factory gate, the company said.
MMI is currently the third largest peanut sheller in the US with a market share of approximately 12 per cent and an annual capacity of approximately 250,000 Farmer Stock Tons (FST). MMI owns processing facilities at two locations in Georgia, the heart of the country’s peanut growing region in the Southeast. In addition, it owns or manages 20 buying points and farmer stock storage assets at strategic locations in the Southeast region with a strong franchise amongst growers.
MMI has also built long-standing relationships with a diverse set of customers in the snack, peanut butter and confectionery space.
President of Olam’s peanut business, Anupam Jindel, said: “Today, the US is the lowest cost producer of peanuts and has the acreage and resources to expand production. The US peanut industry has an evolved market structure and is advanced in its seed technology, which helps to keep the industry very competitive. We see a steady rise in production and exports in the future to meet the increased demand in emerging markets such as China and India. This provides a clear rationale to invest in the US peanut shelling operations and close out an existing gap in our supply chain. We are pleased to have secured this opportunity through MMI.”