US agribusiness Archer Daniels Midland (ADM) has agreed to buy Swiss-German natural ingredient company Wild Flavors for 2.3 billion euros ($3 billion) to enter the flavouring and the health-conscious food sectors.
ADM, one of the world's largest grain traders and a major food processor, said on Monday it would establish a new business unit called Wild Flavors and Specialty Ingredients and expected to complete the deal by the end of the year.
Wild Flavors — ADM's first venture into the flavours market — specialises in natural ingredients. The acquisition comes as consumers have been showing increasing appetite for foods made of only natural components. The transaction, which includes around 100 million euros of net debt, values Wild Flavors at a hefty multiple of 16.4 times its core earnings against a peer multiple of 11, according to Thomson Reuters data. ADM is targeting 100 million euros of cost savings by the third year of the acquisition.