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Archer Daniels' Neovia Buyout to Bolster Nutrition Portfolio

Zacks Equity Research

Archer Daniels Midland Company ADM recently concluded the Neovia buyout, which will help the company to expand its global footprint in the animal feed industry. This €1.544 billion acquisition is expected to aid in offering value-added products, and complete solutions for production and companion animals. In fact, the deal marks an important milestone for Archer Daniels’ strategic plan and portfolio transformation, helping it to become a leader in the nutrition space.

This is Archer Daniels’ most prominent acquisition since the buyout of WILD Flavors in 2014. It also signifies the company’s strategic investment in France, in sync with its value creation strategy introduced in 2014. The buyout will also bolster Archer Daniels’ relationships with French farmers and enable it to enter into partnerships with French Cooperatives. Moreover, the company’s presence will expand in Western Europe, South and Central America, and Southeast Asia, where Neovia has significant operations.

Notably, the Neovia buyout will be integrated in to the company’s animal nutrition business, which is expected to generate sales of $3.5 billion. Neovia is a nutrition solutions provider, operating in business lines — including premixes, value-added services, aquaculture, pet care, additives and ingredients, and complete feed. Moreover, Neovia’s global presence coupled with product innovation and R&D capabilities will craft a major global animal nutrition provider, with complete solutions for customers worldwide.

We note that Archer Daniels has been intensely focusing on strengthening its Nutrition portfolio. Apparently, the WILD Flavors buyout highlighted the company’s most significant portfolio transformation in the 115-year history, thereby boosting its human as well as animal nutrition capabilities. In addition, it has made major investments in the animal health and nutrition space, which includes building three animal nutrition plants in China and four in the United States; spending in the latest value-added complete feed producing facilities in North America; partnering with the Qingdao Vland Biotech Group; and purchasing Crosswind Industries and Protexin.

In an effort to manage its business portfolio, Archer Daniels remains focused on undertaking strategic initiatives. These initiatives are expected to help in realizing value and invest the same in best possible resources to enhance returns.

Moving ahead, Archer Daniels remains focused on five major platforms, animal nutrition, health & wellness, carbohydrates, human nutrition and taste, to boost growth.


 

Driven by its growth initiatives, shares of Archer Daniels have gained 10.6% in a year, outperforming the industry’s 0.4% upside. Currently, the company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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