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Exclusive: Agribusiness giant ADM made buyout approach to Argentina's Molinos - sources

Reuters  |  BUENOS AIRES/LONDON 

By Hugh and Jonathan Saul

BUENOS AIRES/LONDON (Reuters) - Top Daniels Midland Co has approached Argentine soy crusher about buying the company's livestock feed and soyoil manufacturing plant, and talks may continue, three sources said.

Molinos and other Argentine soy crushers have been pummeled by fallout from the U.S.-trade policy war which has given U.S. crushers a competitive advantage.

The discussions began last year and then stalled over the price that ADM would pay for Molinos, a Buenos Aires-based industry source with knowledge of the situation told

ADM declined to comment.

A for the Perez Companc business group, which controls Molinos Agro, said the company had been approached "several times" by potential buyers. Without mentioning ADM in particular, the said "the offers were rejected."

It was unclear how much Molinos, controlled by the Perez Companc business group, was valued at during the negotiations.

"ADM backed off because of the asking price," the Buenos Aires-based industry source said. "There were differences in the valuation of the company. But it is logical that ADM could be back knocking on the door of Molinos."

The reported 665.9 million pesos ($18.5 million) in net earnings for the April through September period.

Company results could be pressured by tensions over global trade policy in the months ahead, the source said. "Next year will be a great year for buying soy crushing companies in Argentina, and a bad year for selling them," the source added.

Argentine crushers are working at about half capacity while U.S. crushers are reaping the benefits of low soy prices after slapped a 25-percent import tariff on U.S. beans. The Perez Companc group has taken a "conservative" stance toward ADM's overtures and has shown no eagerness to sell, the source said.

Two separate international industry sources with knowledge of the situation said exploratory talks between ADM and Molinos had taken place this year.

"is a key focus for ADM and they need assets there," one said.

"ADM will seek to take advantage of its strong position by taking over a major Argentine crushing operation that is being squeezed by the trade war," another added.

An ADM-Molinos combination would be in line with recent consolidation of the sector which has wrestled with a global oversupply of grains and oilseeds.

The escalating trade war between the U.S. and has reordered trade flows across the global grains sector, affecting companies like ADM, Bunge, and Louis Dreyfus Co, which together are known as the "ABCDs" and dominate the industry.

The trade policy dispute between the world's two largest economies has driven down U.S. soybean prices, which in turn has helped fuel profits for U.S. ADM reported a higher-than-expected quarterly profit this week, cashing in on strong oilseed crushing margins.

CRUSHING CAPACITY

ADM is the only one of the "ABCDs" that has no crushing capacity in The company's said this week the group may look at mergers and acquisitions in general if a deal made sense.

ADM earlier this year made a takeover approach for

Crushing plants that dot the banks of the River, Argentina's main grains thoroughfare, are seeking to revive their business with a deal that would permit them for the first time to export soymeal livestock feed to China.

China generally imports beans to be crushed on the mainland, but with trade tension rising with Washington, may want to lock in alternative supplies. The U.S.-China conflict, which has shifted global commodity trade routes and distorted prices, is not the only factor ailing Argentine crushers.

Earlier this year the sector was hit by a drought on the Pampas farm belt that shriveled soybean supplies.

But over the long-term, with demand growing for soymeal feed needed for China's massive pork sector, soy crushing along the may thrive again. is the world's top exporter of soymeal and soyoil, used for cooking and making biodiesel.

The nation's massive soy crushers and grains elevators are sandwiched between the Pampas and the deeply dredged The set-up offers logistical advantages over main competitors and the United States, where moving grains involves more and loading products on and off barges.

Molinos was formed in 1902 as a unit of It was sold to the Perez Companc group in 1999. The company's main crushing facility is in San Lorenzo, on the Parana. It has a nominal crushing capacity of 20,000 tonnes of soy per day.

(Additional reporting by and in Chicago; editing by Dan Flynn)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, November 09 2018. 12:40 IST
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