PARIS (Reuters) - ADM is in exclusive talks to take over animal nutrition business Neovia for 1.5 billion euros ($1.75 billion), marking a new step in the U.S. agricultural giant's strategy to expand in the fast growing feed sector.
Neovia is majority owned by French cooperative group Invivo. Investment group Eurazeo also has a 17 percent stake in the company.
ADM and its rivals such as Bunge, Cargill and Louis Dreyfus Company have been forced to review their approach in recent years as a global oversupply of food commodities has made it tough to turn a profit on their core business: buying, processing, and selling soy, corn and wheat.
Chicago-based ADM had said in March it was shifting its business segments into four new units - carbohydrate solutions, nutrition, oilseeds and origination - to differentiate its offerings to customers.
"We were happy with our animal feed activities but it was too local, mainly based in North America and with a little in Mexico and China. We decided that if we wanted to expand we needed a more global approach," ADM President Europe, Middle East and Africa Pierre-Christophe Duprat told Reuters.
"The opportunity came with Neovia. There are not many actors on the market and...their product and geographical mix suited us."
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Invivo is France's largest cooperative group, gathering 206 cooperatives and 300,000 farmers, and employing 10,200 people in 34 countries. Sales stood at 5.5 billion euros in 2016/17.
Of this, Neovia had sales of 1.7 billion in 2017 and employs 8,200 staff.
($1 = 0.8591 euros)
(Reporting by Sybille de La Hamaide; Editing by Sudip Kar-Gupta)
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