Boortmalt, which is owned by French farmer co-op Axereal, has purchased the malt business of US grain trader Cargill.

The deal makes Boortmalt the world’s largest malt producer with a total production capacity of 3m tonnes globally.

The acquisition will combine Boortmalt’s existing total global capacity of 1.3m tonnes (mt) with Cargill’s 1.7mt and will now have 27 malting plants on five continents.

The financial terms of the deal, which was first flagged last December, were not disclosed.

Boortmalt, which has a malt plant in Athy, Co Kildare, bought the business from Greencore in 2010 for €116m.

Up to last year, driven by the growing demand for malt, all of Boortmalt’s malting plants were running at full capacity

Boortmalt operates plants across Europe, including France, England, Scotland, Ireland, Croatia and Hungary.

Up to last year, driven by the growing demand for malt, all of Boortmalt’s malting plants were running at full capacity.

It has since invested in projects in Antwerp, Athy and Ethiopia, adding 200,000t of capacity, bringing total capacity to 1.3mt.

Cargill, which entered the malt business in 1979, is exiting malt to focus on its other food and beverage ingredient groups.

Its malt business includes 15 plants around the world – in Argentina, Australia, Belgium, Canada, France, Germany, the Netherlands, Spain and the US.

Investment

Following a €32m investment last year, Boortmalt has the world’s largest malting plant in Antwerp with a total malt production capacity of 470,000t. It is also reinforcing its Athy site, adding 30,000t of capacity bringing it up to 130,000t. In August, a building used to produce malt collapsed at the Athy site, temporarily hitting capacity. Separately, it is currently developing a 60,000t malting plant in Ethiopia.

Axereal, which has a turnover of €2.5bn and made €9m in profits last year, is owned by French farmers.

The CEO of Boortmalt, Yvan Schaepman, says this deal offers new growth prospects and will enable the company to better mitigate risks

Its stated ambition is to “become the best malster in the world” and its strategy is to invest downstream to increase the value of its farmers’ production – keeping true to its co-op ethos.

The CEO of Boortmalt, Yvan Schaepman, says this deal offers new growth prospects and will enable the company to better mitigate risks. He says it will allow it to accelerate the development of new malting barley varieties and to create new malts.

By investing in its malt business unit, Axereal and Boortmalt are developing added-value barley markets for farmers while also creating value which can be redistributed to its farmer members.

Boortmalt buying a large US competitor is significant and transforms it into a true global player of scale – the largest malster in the world – and shows the strength of Boortmalt’s business.

It is welcoming to see Boortmalt investing in its Irish operations following decades of under-investment.

The global malt sector now is in the hands of four key global players

However, further consolidation in the malt segment across the world may not be in the best interests of malting barley growers.

The global malt sector now is in the hands of four key global players.

While a co-op structure in general benefits farmers, the farmers who own this business are French, not Irish. Therefore Irish grain growers are unlikely to reap any dividends from the overall malt business outside of the market price they receive for malting barley.