Cargill to Extend Growth in Animal Nutrition After Provimi Deal

Cargill Inc., which purchased animal-nutrition supplier Provimi for about $2 billion in 2011, is putting the final touches to an expansion plan targeting markets such as China and India.

Europe also remains a potential area for growth, even as not all markets are growing at the same rate, Scott Ainslie, vice president at Cargill’s animal nutrition division, said in a phone interview.

“We’re in the process of wrapping up some global strategy work that really seeks to leverage the capability, the opportunities and the geographies that we can go into because of the combination,” with Provimi, Ainslie said.

Cargill last month signed an agreement to develop animal-feed offerings using CSM NV’s lactic-acid-based compounds that reduce the levels of antibiotic growth promoters used in animal rearing. While Minneapolis-based Cargill has developed its own technologies, it forms ties with others when needed, Ainslie said. Chemical companies including BASF SE (BAS) have entered the industry to diversify away from commodity products.

Collaboration in the $5 trillion global agribusiness industry, whether through acquisitions or non-exclusive agreements, will probably increase as companies contend with increased volatility caused by climate change, political intervention in areas such as biofuel, and social changes, according to a report by KPMG.

Spending on the research and development of animal-nutrition products increased to $410 million in 2010 from $314 million in 1994, KPMG said in a report this week. Deals have included Bayer AG (BAYN)’s purchase of AgraQuest for at least $425 million and BASF SE’s $1 billion takeover of Becker Underwood.

“We really look at where our biggest growth opportunities are and in some cases that involves organic growth or expanding the footprint that we already have, and in some cases that might involve an acquisition,” Ainslie said. “Whatever makes sense.”

To contact the reporter on this story: Andrew Noel in London at anoel@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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