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Archer Daniels' Unit Buys Harrell Nut, Changes Name

Zacks Equity Research

In an effort to expand its product portfolio, Golden Peanut Company LLC, a subsidiary of Archer Daniels Midland Company (ADM), completed the acquisition of some assets and the processing facilities of United State’s leading processors and shellers of pecans, Harrell Nut Company. Additionally, to mirror this expansion and the unit’s commitment to diversify its business, it has changed its name to Golden Peanut and Tree Nuts along with the introduction of a new logo.

The company’s acquisition of Harrell Nut Company adds to its portfolio the leading domestic pecan processor’s facilities in Camilla, GA; El Paso, TX and Monticello, FL. Also, it enhances the company’s exposure as the acquired business operates in both North America and the international markets.

Earlier this year, the company had initiated its diversification into the tree nuts product line through the acquisition of 50% stake in South African Pecans.

The company anticipates the U.S. pecan market to attract increased consumer interest in the coming years due to an increased demand for healthier, more convenient foods. Over the last decade, the U.S. pecan demand has witnessed nearly 40% growth.

As a result, Archer Daniels through these acquisitions is bucking up to get a share of this improved demand by building on its core peanuts business. Through this acquisition, the company seeks to further satisfy its customers while minimizing earnings volatility.

ADM is making several attempts to cater to the rising consumer demand for healthy, tasty and superior-quality food. Apart from this acquisition, the company last month completed the acquisition of WILD Flavors GmbH, expanded its joint venture with Marubeni Corporation and struck a deal to buy Specialty Commodities Inc. (“SCI”) for $170 million.

We have observed that Archer-Daniels, which competes with Wilmar International Ltd. (WLMIY), is undertaking strategic steps to manage its business portfolio. These are likely to help the company in realizing value from its businesses and invest the same in the best possible resources to enhance returns.

Likewise, this acquisition is expected to solidify the company’s portfolio, improve its knowledge, help focus on consumers and drive returns.

Archer-Daniels currently carries a Zacks Rank #3 (Hold). However, better-ranked stocks in the industry include Amira Nature Foods Ltd. (ANFI) and Calavo Growers Inc. (CVGW), both of which sport a Zacks Rank #1 (Strong Buy).

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