NEW YORK, NEW YORK, U.S. — While it may not always seem that Archer Daniels Midland Co. is moving fast enough in terms of acquisitions, the Chicago, Illinois, U.S.-based company is going fast enough from the perspective of the value that it is creating, said Juan Luciano, chairman, president and chief executive officer.
Speaking to participants during a May 15 presentation at the BMO Capital Markets Farm to Market Conference in New York, Luciano touched briefly on the company’s future acquisition strategy.
“We are in the market for bolt-ons like we’ve been before — the small less-than-$100 million kind of thing,” Luciano explained. “Bigger than that (deals), it’s difficult to find something at the multiple that actually justifies the returns that we have as a discipline.”
Two transactions over the past five years that did justify the returns were deals for Wild Flavors in 2014 and Neovia in 2019. ADM paid approximately $3 billion for Wild and $1.8 billion for Neovia.
But the focus for the company will be different over the next five years, he said.
“We’re going to stay away from those (larger acquisitions),” he said. “We want to create value for shareholders. And I think that a combination of bolt-ons and organic growth, it creates the problem that you don’t look like you’re moving the needle that much because we are a large company, $65 billion, and it feels like you’re not going fast enough.
“But we are going fast enough from the perspective of the value that we are creating. So we feel good about that.”