Olam: Weighing selling additional Olam Agri stake

Rice paddies in Khua Pha Pass in Vietnam; photo published in December 2016. Photo by Doan Tuan on UnsplashRice paddies in Khua Pha Pass in Vietnam; photo published in December 2016. Photo by Doan Tuan on Unsplash

Olam Group is considering selling up to an additional 10 percent of Olam Agri Holdings, the agri-business said in a circular filed to SGX Sunday for the upcoming extraordinary general meeting (EGM).

The group agreed in March to sell a 35.4 percent stake in Olam Agri to Saudi Agricultural and Livestock Investment Co. (SALIC), which is wholly owned by the Public Investment Fund of the Kingdom of Saudi Arabia (KSA), for US$1.24 billion. That deal, which valued Olam Agri at US$3.5 billion, will be subject to shareholder approval at the EGM. Majority shareholder Singapore state-owned investment company Temasek Holdings, has already agreed to vote in favour of the deal.

In addition, Olam Group is seeking approval for the proposed additional stake sale, which would be to SALIC and/or other potential investors, the filing said.

If both the proposed stake sale and the additional sale are both completed, the aggregate proceeds could reach US$1.59 billion, Olam Group said, but it noted there was no certainty the additional stake sale would happen.

Olam Group said it plans to continue to hold the majority of Olam Agri.

Olam has re-organised into three operating groups: Olam Agri, Olam Food Ingredients (OFI) and the remaining Olam Group, which includes gestating businesses, Olam Ventures’ businesses and Olam Technology and Business Services.

Olam Agri is an agribusiness focused on origination, trading and marketing, as well as logistics and processing; its businesses include grains, integrated feeds and proteins, edible oils, rice, specialty grains and seed, cotton, wood products, rubber and commodity financial services.

SALIC has previously said the investment in Olam Agri was in line with Saudi Arabia’s food security objectives. SALIC has identified 12 key food commodities of strategic importance, six of which Olam Agri has a presence in: Wheat, barley, rice, corn, soybeans and edible oils.