ADM expands probiotics reach with $243 million aquisition of UK manufacturer

29-Jun-2018 - Last updated on 29-Jun-2018 at 15:44 GMT

Agricultural commodities giant Archer Daniels Midland Co. has expanded its reach into the microbiome space with the acquisition of UK-based manufacturer Probiotics International Ltd. in a cash deal worth $243.5 million (£185 million).

The deal is part of a recent aggressive push by Chicago-based ADM to expand its health and wellness offerings and specifically to expand its reach into microbiome solutions.

Coping with declining revenues

The company reported more than $60 billion in revenue in its fiscal 2017. While huge, that represents a significant drop from 2013, when publicly-traded ADM notched almost $90 billion in revenue. The company has been hurt by low commodity prices for grain and a glut of cereals on the world market with huge quantities reportedly coming out of Latin America. The company’s biggest business segment is in agricultural services, which is depressed by US farm revenues, which have been flat for a number of years.

One way in which commodity players seek to deal with thinning margins is to get bigger. ADM reportedly tried to do this via a deal with US agribusiness rival Bunge, which is based in White Plains, NY. According to US financial news service Bloomberg, talks on the merger broke down earlier this year.

Another way to deal with fluctuating commodity prices is to diversify into higher margin areas. While much of ADM’s business is still in commodities and services, the company already has a significant footprint in the health and wellness sector. ADM supplies a number of ingredients into the dietary supplements industry, including phospholipids, soy isoflavones, DHA algal oil and plant sterols. ADM also bills itself as the world’s largest producer of natural vitamin E.

Microbiome initiative

More recently ADM has been aggressively moving to expand its expertise and offerings in the area of gut health.

ADM said the PIL deal will build on its acquisition in 2017 of Spanish biotech firm Biopolis. Biopolis, which is based in a research park associated with the University of Valencia and was a spin off of the Spanish National Research Council, specializes in the fields of biochemistry, molecular biology, fermentative process scaling, genetics, chemical engineering, microbiology, nutrition and food technology.

“ADM is already one of the world’s largest providers of human and animal nutrition solutions, and the acquisition of PIL will add to our extensive portfolio of products that promote health and wellness,” said Vikram Luthar, president, ADM Health & Wellness.

ADM also in late 2017 announced a partnership with the Mayo Clinic, a prominent research hospital chain based in Rochester, MN. The collaboration is aimed at looking for personalized nutrition solutions to support healthy body weight through probiotics, prebiotics and other nutrients. Biopolis’s biotechnology chops were said to be a big part of that deal, too.

Luthar added: “We took a major step in this area last year with the addition of Biopolis, and then added to our capabilities with our personalized nutrition collaboration with Mayo Clinic, our joint development agreement with Vland Biotech, and our new enzyme lab in California. Now, with the addition of PIL’s extensive sales and marketing network to our existing R&D capabilities, we are building a world class, fully integrated probiotics and nutraceuticals business.”

Human, animal nutrition brought under one roof

PIL, based in Somerset, UK — and known under its umbrella brand Protexin — is a provider of probiotic supplements for human wellness and animal markets, including aquaculture, equine, livestock and companion animals. With sales into more than 60 countries, PIL produces the popular Bio-Kult brand of probiotic supplements along with contract-manufactured products. The company has about 160 employees.

Earlier this year, ADM bundled up all of its animal and human food offerings into a single Nutrition business unit. The president of the division, Vince Macciocchi, said the PIL deal is part of an ongoing expansion for the company.

“A key part of that integrated Nutrition platform is our Health & Wellness business, which includes bioactives, botanical extracts and specialty nutritional oils,” Macciocchi said.

“The addition of PIL is just one of the many important investments we are making to grow our entire integrated Nutrition business. From the growth of our bioactives platform, to new Animal Nutrition facilities in North America and China, to our expanding network of food and beverage ingredient innovation centers, we are enhancing our presence in a growing market,” he added.