Agribusiness giant Archer Daniels Midland said Monday that it will buy Swiss-German natural ingredient company Wild Flavors for $3 billion, a purchase aimed at capturing customers that increasingly favor foods with natural ingredients and flavorings.

Decatur, Ill.-based ADM, one of the world's largest grain traders and a major food processor, said it will establish a new business unit called Wild Flavors and Specialty Ingredients and expects to complete the deal by the end of the year.

Wild Flavors, based in Switzerland, is ADM's first venture into the flavors market. Consumers have been showing increasing appetite for foods made of only natural components. With the purchase of Wild Flavors, ADM will get access to a wide variety of flavors, seasonings and colors derived from natural sources and used in processed foods and drinks.

ADM Chief Executive Patricia Woertz said in a call with industry analysts that Wild Flavors will be a "growth engine" for ADM.

Almost 30 percent of new food product launches over the past two years have been based on the health sector, said Evgenia Molotova, a London-based equity research analyst for Berenberg Bank.

"The sector attracts a lot of [merger and acquisition] interest, because it's very cash-generative with stable earnings growth," she added. "Ingredients is a very unconsolidated market, and there are a number of private companies that could be interesting."

The transaction values Wild Flavors at 16.4 times its core earnings, according to Thomson Reuters data. ADM is targeting $136 million of cost savings by the third year of the acquisition.

"I think it will be very difficult for them to extract value at such a high valuation," Molotova said. "It's an ambitious target in terms of synergies."