Fitch: Archer Daniels unaffected by acquisitions

Fitch Ratings said the recently announced agreements by Archer Daniels Midland to acquire Neovia and Probiotics International Ltd. are not expected to affect Archer Daniels' A issuer default rating.

The agency said it expects Archer Daniels will fund the Neovia transaction primarily through long-term debt.

Fitch said that, in its view, the Neovia transaction is in line with Archer Daniels' growth plans to improve capabilities and increase exposure to value-added animal nutrition products and solutions that can serve as a platform for additional potential bolt-on acquisitions to expand the firm's geographical reach.

“These transactions should enhance ADM's business profile and incrementally reduce earnings volatility, evidenced by nutrition as a percent of pro forma operating profit increasing to mid-teen range compared to the mid-single digit range in 2014 with decreasing exposure to origination and oilseeds during this period,” the agency said in a news release.

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