corn harvest
Validus has committed to keeping the CRS business intact, including maintaining its operations in Decatur, Illinois, U.S.
CHICAGO, ILLINOIS, U.S. —Archer Daniels Midland Co. (ADM) has reached an agreement to sell its Crop Risk Services (CRS) business to Validus Holdings, Ltd. for $127.5 million, subject to certain working capital and balance sheet adjustments. The transaction includes a marketing services agreement under which ADM and Hamilton, Bermuda-based Validus will work together to continue to offer a full range of insurance and farmer marketing products and services to CRS customers.

“We regularly evaluate our portfolio to ensure that our businesses and assets best fit our strategy to maximize long-term returns,” said Joe Taets, president of ADM’s Agricultural Services business unit. “As a result of that ongoing process, we have identified a better strategic fit for the Crop Risk Services business. In the years since we purchased ADM CRS, that team has built it out to become a significant market participant. Equally as important, ADM CRS has become a platform through which our grain business is able to offer our farmer partners a wide array of services that benefit both them and ADM.”

Taets said the sale of CRS benefits ADM on two fronts.

ADM Joe Taets
Joe Taets, president of ADM’s Agricultural Services business unit.

“It includes a marketing services agreement that will allow ADM and Validus to work together to continue to offer customers a full array of crop insurance products as well as ADM’s grain marketing services, while the sale of the business gives us the opportunity to redeploy capital as part of our balanced capital-allocation framework,” he said. “We are pleased to have found a buyer in Validus that is committed to running — and growing — the business, and we look forward to continuing to work with Validus and the CRS sales team and their customers across the country. This is a good solution for ADM, our shareholders, the CRS team, and the farmers who are the foundation of our business.”

Validus is a global provider of insurance, reinsurance and investment services, with more than 800 employees and offices in all major regions worldwide. The company has committed to keeping the CRS business intact, including maintaining its operations in Decatur, Illinois, U.S.

“CRS is a high quality crop insurance provider that has achieved excellent growth in recent years,” said Ed Noonan, chairman and chief executive officer of Validus. “Validus will benefit from CRS’s commitment to provide superior customer service to agents and farmers via their leading technology capabilities. The addition of CRS complements Validus’ existing agriculture book and participation in this market is a logical step as Validus continues to expand our presence in U.S. primary specialty lines. We are excited by the long-term partnership with ADM as this transaction further provides the unique opportunity of a marketing services agreement with one of the largest agricultural processors in the world.”

The sale, which is subject to regulatory review, is expected to close in the first half of 2017. Nearly all ADM CRS employees will transfer with the CRS business at closing. ADM expects to record a book gain upon closing.

This is the latest in the series of ADM sales and expansion, acquisition projects. In early January, ADM signed an agreement to acquire Crosswind Industries, Inc., a Kansas, U.S.-based producer of dry-expanded, dual-texture, semi-dry and semi-moist treat products for pets.

In December 2016, ADM announced it had entered into an agreement to sell its 19.9% ownership stake in GrainCorp Ltd. for A$8.53 per share, or approximately A$387 million ($287.1 million).

The company also said in December it plans to expand overall grind and finishing capacity for sweeteners and starches at its corn wet mill facilities in Turkey and Bulgaria.

In June 2016, ADM launched a new soybean crushing capacity at its oilseeds plant in Straubing, Germany. Straubing’s new capability allows the site to crush soybeans sourced from the Danube region in order to market European non-GMO soymeal and oil to customers in Western Europe. ADM also announced in the same month the opening of its new feed facility in Glencoe, Minnesota, U.S., with an annual capacity of 100,000 tonnes.

The company also announced that it is investing to expand and modernize its pet food and specialty livestock feed operations in Effingham, Illinois, U.S. The Effingham facility is expected to be fully operational in late 2017 or early 2018.

In November, ADM announced plans to build a new, modern feed facility to replace its current operations in Quincy, Illinois, U.S. It is expected to be completed in mid-2018.