SINGAPORE (Dec 5): Olam International will pay US$176 million ($220 million) for full control of McCleskey Mills Inc (MMI), the third-largest peanut sheller in the US.

Olam, which has been operating in the US peanut industry since 2007, said in a statement this morning that the acquisition will expand its role in the industry's value chain.

"MMI links its own procurement and origination (supply chain) infrastructure with Olam’s midstream processing capabilities, thereby completing Olam’s value-chain presence from farm gate to factory gate."

MMI owns processing facilities at two locations in Georgia, the heart of the country’s peanut-growing region in the Southeast.

It also owns and manages 20 buying points and storage facilities and has long-standing ties with companies in the snacks, peanut butter and confectionery businesses.

Olam will fund the acquisition, slated to be completed by 3QFY2015, using internal accruals and existing debt facilities.

It expects the deal to be earnings-accretive from the first year after consolidation.

Olam said its existing global network for marketing edible nuts and experience in peanut shelling through its operations in Argentina, India and South Africa will help "unlock the full growth potential" of MMI.

"This has increasingly become a strategic imperative as the US is the leading cost-competitive producer and exporter of peanut products in the world," Olam said.

The acquisition will also enhance Olam’s ties with farmers and boost its market intelligence, given MMI's established network and franchise, it added.

Olam shares ended 0.5% lower at $2.11 yesterday.