This item was originally published on Wednesday, 1 December 2021 at 12:13 p.m. SGT; it has since been updated to include a comment from Olam on the deal pricing.
Olam International has acquired a 10 percent stake in a Saudi flour milling company as part of a consortium including National Agricultural Development Co. (NADEC), Al Rajhi International for Investment Co. and Ajlan & Bros, the Singapore-listed agri-business said in a filing to SGX Wednesday.
Olam paid around US$13 million for the 10 percent stake, a spokesperson from Olam told Shenton Wire via email. The spokesperson added that business expansion is usually financed via a combination of internal funds and borrowing.
According to a July press release from Saudi Arabia’s National Centre for Privatization (NCP), the consortium paid 2.138 billion Saudi riyals for the milling company, or around S$777.34 million, or US$569.86 million.
Olam said in the statement Wednesday it will participate in the joint venture, called Food Security Holding Co., as the technical partner, with the other consortium members holding the remaining 90 percent of the entity.
‘This investment supports our strategy to expand our wheat milling footprint in key markets across Africa and the Middle East,” Saurabh Mehra, president of Olam’s wheat milling business said in the statement. “This acquisition is part of our entry strategy into the Kingdom of Saudi Arabia. The joint venture will allow us to leverage our best-in-class technical expertise while gaining valuable insight into doing business in the country.”
The joint venture will own manufacturing plants in three locations — Riyadh, Hail and Jazan — with a combined wheat milling capacity of 1.3 million metric tonnes, the filing said.
Olam said it will manage the plants and operations, using its experience operating flour mills in West Africa.
The Saudi flour milling company had been tendered for privatization by the National Centre for Privatization (NCP) and the Saudi Grains Organization (SAGO), the filing said.