Singapore's Olam International Ltd. is to buy the worldwide cocoa business of Archer Daniels Midland Company (ADM) for $1.3 billion.

The two companies announced this week that they had reached an agreement for the sale of ADM's entire global cocoa business, including processing facilities in Mississauga, Canada; Koog aan de Zaan and Wormer in the Netherlands; Mannheim, Germany; Ilhèus, Brazil; Abidjan, Cùte d'Ivoire; Kumasi, Ghana; and in Singapore. The deal also includes ADM's buying stations in Brazil, Cameroon, CÙte d'Ivoire and Indonesia, as well as the company's deZaan and UNICAO brands.

For ADM, this sale frees capital for higher-return, less-volatile investments, while for Olam it allows the company to establish its cocoa business, Olam Cocoa, as one of the world's top three cocoa processors, supplying cocoa liquor, powder and butter.

The Singapore-based commodities firm expects the addition of the ADM business to be earnings, returns and free cash flow accretive in the first full year after closing. Going forward, the acquisition is anticipated to lead to segmental EBITDA growth of 86-95 percent, overall company EBITDA growth of 20-22 percent and net income and EPS growth of 25-30 percent by fiscal year 2018, compared to fiscal year 2014.

The proposed sale, which remains subject to regulatory clearance, is expected to be completed in the second quarter of 2015. Most of the 1,550 employees who currently work in ADM's cocoa business will transfer to Olam.

ADM noted that the transaction does not impact the sale of its chocolate business to Cargill, which is progressing as planned.