Why ADM Is Buying Wild Flavors for $3 Billion

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July 7 (Bloomberg) -- Archer-Daniels-Midland is acquiring Wild Flavors for about 2.2 billion euros ($3 billion) as it seeks to diversify from grain processing and tap into the less volatile natural ingredients business. Alan Bjerga explains the motives behind the deal with Pimm Fox on "Taking Stock." (Source: Bloomberg)

Do this deal?

Commodities is a very volatile business.

Archer daniels midland, one of the world's largest shippers ingrain -- grain is volatile.

They are looking both for some diversity and some stability.

Wild flavors promises to give them a little more of that.

And get them a little further downstream, little closer to the consumer in countries where natural foods are more common.

It expands the global footprint and it gives them a little more diversity within the food industry which should help archer daniels midland get a little more consistent financial performance.

Do you remember capri, the fruit juice?

Capri sun.

We used to sit in elementary school and read through the ingredients.

-those currents are of that high fructose corn syrup -- high fructose currentorn syrup.

They didn't get capri sun in this deal.

When you talk about high fructose currentorn syrup, decca be the segue to tell us what is going on with the corn crop.

A lot of farmers think they could sell even more.

Koran is heading for another bumper crop.

It is a traumatic -- dramatic turnaround we had that a drought . you are seeing the opposite situation.

Farmers cut back on their planting more than 4% this year.

They planted less corn and more soybeans.

The usda's looking at record yields.

That is making the corn crop larger even though they have less acreage.

It is driving down prices which drowned -- drives down profit margins.

It is a huge turnaround.

What are the implications for what farmers are going to play next season or do we not know yet?

It has to do with supply and demand and weather patterns.

They certainly can know what the supply situation will be.

At the tight inventory of a couple of years ago coming to a huge surplus over the next several years, you may see less corn planting bed in some parts of the country, corn is just what you were going to do.

It is what the infrastructure is suited for.

There is a history of this with agriculture where you have a real bust and then there was a huge boon.

There was a big pull for ethanol as well.

Ethanol has been a big driver of this market for about the past decade.

You have seen the mandate level law and you were seeing in some ways less ethanol being required by the government in there has been before.

The varieties never took oof.

As you continue to have better

This text has been automatically generated. It may not be 100% accurate.


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