SINGAPORE — Olam International Ltd., an agri-business operating in 65 countries, has signed a purchase agreement to acquire a 100% interest in Smithville, Ga.-based McCleskey Mills, Inc. for $176 million.
McCleskey Mills is the third largest peanut sheller in the United States with a market share of approximately 12% and an annual capacity of approximately 250,000 farmer stock tons. The company owns processing facilities at two locations in Georgia, and owns or manages 20 buying points and farmer stock storage assets in the Southeast region. The company operates in the snack, peanut butter and confectionery space.
Olam is no stranger to the U.S. peanut industry. The company has been operating in the industry since 2007 through its acquisition of Universal Blanchers L.L.C., which specializes in toll blanching and ingredient manufacturing of peanuts. Universal Blanchers has four manufacturing facilities located across the U.S. peanut belt in Georgia, Texas and North Carolina.
Olam said the acquisition of McCleskey Mills is consistent with its strategy to selectively invest in prioritized platforms, which includes edible nuts. It also extends Olam’s participation in the U.S. peanut value chain as McCleskey Mills links its own procurement and origination supply chain infrastructure with Olam’s midstream processing capabilities, thereby completing Olam’s value chain presence from farm gate to factory gate.
The acquisition also will make Olam the only global player with sourcing and peanut shelling operations in all key peanut origins (United States, Argentina, India and South Africa) and presence in all main markets (European Union, United States, China, India and Southeast Asia).
“Today, the U.S. is the lowest cost producer of peanuts and has the acreage and resources to expand production,” said Anupam Jindel, president of Olam’s peanut business. “The U.S. peanut industry has an evolved market structure and is advanced in its seed technology, which helps to keep the industry very competitive. We see a steady rise in production and exports in the future to meet the increased demand in emerging markets such as China and India. This provides a clear rationale to invest in U.S. peanut shelling operations and close out an existing gap in our supply chain. We are pleased to have secured this opportunity through MMI.”
Ashok Krishen, Olam’s managing director and global head of edible nuts, added the acquisition will add further to the scale, scope and strong franchise of Olam’s global edible nuts business.
“I am confident that the edible nuts team has the capability to integrate this business, achieve volume growth and extract synergies in peanuts, both within and outside the U.S.,” Mr. Krishen said. “This combination will strengthen our portfolio and enable us bring further value to our customers and suppliers.”
The McCleskey Mills senior management team will continue to manage the company’s operations from Smithville after the acquisition and will be responsible for expanding McCleskey Mills’ franchise with its growers and customers.
“With Olam, we will have access to the resources and infrastructure of a larger parent company that will afford our customers, growers and employees with tremendous stability,” said Joe West, executive vice-president of operations and sales at McCleskey Mills. “Notwithstanding the change in ownership, we will continue to drive the business as we always have.”The acquisition will be funded by a combination of internal accruals and existing debt facilities. The transaction is expected to be completed by the third quarter of fiscal 2015.