S’pore-listed Olam to make $2.46 billion gain from sale of stake in agribusiness unit; shares surge
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The Saudi buyer has three years to exercise a call option on the rest of Olam Agri that Olam Group owns.
PHOTO: BLOOMBERG
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SINGAPORE - Singapore-listed Olam Group’s share price jumped after one of the world’s biggest cocoa and coffee merchants announced the sale of a major stake in its agribusiness unit to a state-owned Saudi Arabian investment firm.
Saudi Agricultural and Livestock Investment Co, known as Salic and controlled by the kingdom’s sovereign wealth fund, will buy a 44.6 per cent stake in Olam Agri for US$1.78 billion (S$2.35 billion), giving it 80 per cent of the unit, Olam said in an exchange filing on Feb 24.
The Saudi firm has three years to exercise a call option on the remaining 19.99 per cent stake in Olam Agri that Olam Group owns.
Shares of Olam Group jumped as much as 8.9 per cent in early trading on Feb 24 to $1.23, their highest level since Jan 6, before paring some of the gains. The counter closed 5.3 per cent higher at $1.19 on Feb 24.
Olam Agri, which sells grains and seeds and makes everything from edible oils to pasta, was created in a rejig of Olam’s structure in 2020.
The company had previously pursued initial public offerings for it in both Singapore and Saudi Arabia. Regulatory bottlenecks delayed those plans, however, and in early 2022, Olam Group agreed to sell around a third to Salic, in a transaction that priced Olam Agri at around $3.5 billion.
The long-anticipated acquisition is a key milestone in the reorganisation of Olam, the group’s chief executive Sunny Verghese said in a statement.
The most recent deal now values Olam Agri at US$4 billion, 23 per cent higher than its current market capitalisation, according to Olam Group.
On completion of the 44.6 per cent stake sale, Olam Group will realise an estimated gain on disposal of US$1.84 billion (S$2.46 billion), it said.
It would unlock US$3.87 billion in gross proceeds from the complete divestment of Olam Agri.
Olam Group, which is also planning to list its ingredients business, ofi, on the premium segment of the London Stock Exchange alongside a secondary listing in Singapore, said it can now focus on ways to unlock value for the remaining businesses.
The sale reflects Saudi Arabia’s increasing ambition in commodities beyond oil.
The kingdom has been making efforts to lower its reliance on the petroleum sector and increase self-sufficiency and security of supply in areas like food and metals.
“The full acquisition agreement of Olam Agri aligns with Salic’s strategic objectives of diversifying sources of essential commodities... to secure a key position in the global grains sector,” Salic group CEO Sulaiman Al-Rumaih said in a statement. BLOOMBERG, REUTERS
