CHICAGO, Ill. (Reuters) —Cargill is buying a natural animal feed maker, another in a string of deals to capitalize on rising demand for higher-margin natural foods and antibiotic-free meat and dairy products.
The company’s recent push, including the deal for Iowa-based Diamond V, has centred on its animal nutrition and protein unit with expansions in feed production and aquaculture and divestitures of its U.S. pork business and cattle feedlots.
Cargill and its rivals have moved to diversify amid a global grain glut that has weighed on margins and dragged profits.
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The deal, expected to close in January, is Cargill’s latest investment in its animal nutrition and protein segment, which has posted higher profits in five straight quarters and is a major focus of the company’s long-term growth strategy.
“We anticipate that we will continue to invest in this space,” said Chuck Warta, president of Cargill’s premix and nutrition business.
The company invested in feed additive company Delacon in July, bought the animal feed business of U.S. farm co-operative Southern States in August and expanded feed milling in Thailand in September.
“This space of micronutrition and feed additives around the world, that’s about a $20 billion mar-ket. Delacon and Diamond V are our initial investments into this,” Warta said.
Cargill did not disclose terms of the Diamond V deal but said it was among the five largest acquisitions in the company’s 152-year history.
Among those deals were a $1.5 billion acquisition of Norwegian fish feed company EWOS and a $1.2 billion deal in 2008 for starch manufacturer Cerestar.
Diamond V is privately held and does no disclose its revenue. The deal includes Diamond V’s human health business Embria Health Sciences, which produces ingredients for dietary supplements.
