FILE PHOTO: Archer Daniels Midland Co (ADM) logo is seen displayed in this illustration taken, April 10, 2023. REUTERS/Dado Ruvic/Illustration/File Photo

By Tom Polansek and Katha Kalia

(Reuters) -Archer-Daniels-Midland will put its 11 U.S. feed mills into a joint venture in which it holds a minority stake, the company said on Tuesday, as it seeks to reduce costs and simplify its portfolio.

ADM has been eliminating jobs and downsizing certain operations since announcing in February that it planned to cut costs by $500 million to $700 million over three to five years.

One of the world's biggest grain merchants, the company has grappled with U.S. trade upheaval and uncertainty around biofuel policies this year.

In the new agreement, ADM said it would form an animal-feed joint venture with agricultural products developer Alltech. ADM will contribute its U.S. feed mills while Alltech will contribute businesses that include 18 feed mills in the U.S and 15 in Canada.

Alltech will be the majority owner, and the joint venture will be governed by a board with equal representation from both companies, according to a statement.

"ADM has historically grown its animal feed business through acquisition, but the returns have not worked out so far," Morningstar analyst Seth Goldstein said. "It makes sense for ADM to look for these kind of partnerships that could add value to its business."

The joint venture is part of ADM's strategy to diversify its animal nutrition business into higher-margin specialty ingredients, the company said in a filing with the Securities and Exchange Commission. Its animal nutrition division is part of the ADM nutrition segment.

Last year, an internal investigation found sales between ADM's nutrition business and other core units were not recorded properly. The nutrition segment had struggled to meet lofty revenue targets.

ADM has feed mills in Mexico and other regions that are not part of the joint venture, and the company said it will keep its U.S. premix and additive businesses.

The companies expect to complete the transaction and launch the partnership in the first quarter of 2026.

(Reporting by Katha Kalia in Bengaluru and Tom Polansek in Chicago; Editing by Krishna Chandra Eluri and Aurora Ellis)