Cargill Open to Deals After Integration Focus, CFO Says

Cargill Inc., the commodities trader that’s the largest closely held U.S. company, is open to deals again after focusing for the past year on integrating prior acquisitions and building plants.

Cargill may direct about a third of its spending on acquisitions for the 2014 fiscal year, which began June 1, Chief Financial Officer Marcel Smits said in a phone interview yesterday. Chief Operating Officer David MacLennan, who was also on the call, declined to comment on potential targets or the level of spending. Organic growth and acquisitions are likely to come outside of North America, he said.

The largest U.S. beef packer after Tyson Foods Inc. tilted its 2013 investments toward expanding, modernizing and building facilities after two fiscal years of acquisitions, according to a Jan. 9 company statement. Among the purchases was Minneapolis-based Cargill’s takeover of French animal nutrition provider Provimi SA in 2011 for $2.2 billion. The acquisition is contributing “nicely” to the bottom line and other purchases also are working out well, Smits said.

Devoting a third of its funds to acquisitions would return the company to its historical average spending ratio, with the remainder going to capital expenditures, Smits said. Cargill agreed to buy Joe White Maltings in Australia from Glencore Xstrata Plc for about A$420 million ($378 million), two people familiar with the matter said Aug. 5. Any additional acquisitions will depend on strategic fit, financial value and accretion to the company, MacLennan said yesterday.

The company will “work closely” with ratings companies to ensure its credit profile isn’t changed because of acquisitions, MacLennan said. Cargill has an A rating from Fitch Ratings and Standard & Poor’s.

Cargill performed due diligence on Decatur, Illinois-based Archer-Daniels-Midland Co.’s cocoa business, Reuters reported in July. MacLennan declined to comment on whether Cargill is interested in buying the unit.

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