A spokesman for the Perez Companc business group, which controls Molinos Agro, said the company has been approached several times by potential buyers and the offers were rejected. But Reuters reported that discussions between ADM and Molinos Agro began last year and then stalled over the price.
Trade tensions between the U.S. and China have given U.S. soy crushing companies a competitive advantage over Argentina’s. Argentine soy crushers are working at half capacity, and U.S. soy crushers are benefiting from low soy prices as a result of China’s tariffs on U.S. soybeans. As U.S. soy prices go down, profits for U.S. soy processors go up.
“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,” a source told Reuters.
Molinos Agro reported net earnings of $18.5 million for the third quarter of 2017. The company supplies segments related to poultry, pork, dairy and pet food production, according to its website.
In January, ADM proposed a takeover of competitor Bunge Ltd., sparking speculation of a possible bidding war between Bunge and Swiss commodity trading company Glencore PLC, which made a takeover approach for Bunge in May 2017. Bunge has a large presence in South America, while ADM mainly does business in the U.S.
If ADM purchases Molinos Agro, it would give the company its first crushing facilities in Argentina, allowing it to compete in the country against Bunge, Cargill Inc. and Louis Dreyfus Co.