Olam's food ingredients unit buying US spice firm ahead of listing

Olam International's soon-to-be-listed food ingredients business is buying United States spice company Olde Thompson at an enterprise value of US$950 million (S$1.26 billion).

The agri-food giant plans to separate and list Olam Food Ingredients (OFI), whose products include cocoa, coffee and edible nuts, by the first half of next year as part of a wider restructuring exercise.

A decision on where to list the business will likely be made by the summer, Olam International chief executive Sunny Verghese had said in February.

Olam's purchase of the 77-year-old US private-label spice supplier from its management shareholders and Kainos Capital could add US$25 million to US$30 million towards core earnings once it joins OFI.

"This transaction builds on our long 15-year partnership with Olde Thompson," said OFI chief executive A. Shekhar.

"Growing our offerings of private-label solutions is right at the heart of OFI's strategy - and within that, spices is one of the most attractive and growing categories, especially in the US."

The deal, he added, would help bridge the gap between OFI's presence in production and supply and dealing with US retail customers.

The transaction is expected to be closed in the second quarter.

Olam also said the proposed purchase will build on its recent two acquisitions in the North American spices sector - US-based chilli pepper business Mizkan America and the onion ingredients arm of Cascade Specialties.

Olam noted that Olde Thompson will create a substantive growth platform for OFI to provide similar sustainable and innovative retail solutions across its other products.

THE BUSINESS TIMES, REUTERS