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Agricultural giant continues to expand

By Rashmi Kumar

Family-controlled Cargill, the world’s largest agricultural commodities trader, plans to acquire animal feed company Provimi, taking advantage of its strong cash position.

Minneapolis-based Cargill, controlled by the Cargill and MacMillan families, said on 15 August that it is buying Provimi, currently owned by a private equity fund, for €1.5 billion.

The purchase of the Netherlands-based business comes just days after Cargill reported strong year-end earnings of $2.69 billion, a 35% increase on the $1.99 billion achieved in the previous fiscal year, ending 31 May.

The company’s non-family vice chairman, Paul Conway, said in a statement that the combination of the two businesses would help Cargill become a global leader in animal nutrition.

“This acquisition would mark a significant step in Cargill’s animal nutrition growth strategy and underlines our commitment to continued long term investment to meet the needs of our customers around the world,” he said.

Provimi, which operates in 26 countries and employs more than 7,000 people across Asia, Europe, Africa and Latin America, is an expert in feed additives and ingredients, while Cargill’s expertise includes feed supply chain and risk management across the animal nutrition sector.

The group’s acquisition follows a line of other purchases it made over the last year as part of its strategy to expand operations in more countries – it has bought businesses in Australia, Germany, Canada and Indonesia.

Cargill was founded in 1865 by William Wallace Cargill, who was later joined by his two brothers Sam and James. The family owns 90% of the business and sold shares in fertiliser company Mosaic in January this year to ensure its private status.

Cargill reported 2011 fiscal revenues of $119.5 billion, up 18% from $101.3 billion in the previous year, which it attributed to strong global demand for agricultural products.