OGL Sells 44.58% Stake in Agribusiness to SALIC

Singapore-based Olam Group, a leading global food and agri-business supplying food, ingredients, feed and fibre to 22,000 customers worldwide, on Monday announced that it will sell a 44.58% stake in Olam Agribusiness to Saudi Agriculture & Livestock Investment Company (SALIC) for $1.78 billion, implying an equity valuation of Olam Agribusiness for $4 billion.

This equity valuation is 23% higher than the $3.25 billion market capitalisation of Olam Group, which currently consists of Olam Agribusiness, and the remaining Olam Group.

This also reflects a 14% premium to the $3.5 billion valuation at which SALIC first acquired a 35.43% stake in Olam Agribusiness in December 2022, which closed at a total final consideration of $1.29 billion. Upon completion of deal, SALIC will own a controlling 80.01% stake in Olam Agribusiness.

In a statement to Singapore Exchange this morning, Olam Group said that it will sell its remaining 19.99% stake in Olam Agribusiness to SALIC, the food and agriculture investment arm of Saudi Arabia’s Public Investment Fund (PIF), at the end of three years from completion of the above mentioned sale at the Closing Valuation plus 6% IRR.

The Group will realise an estimated gain on disposal of $1.84 billion which will accrete to its equity reserves of. It would raise estimated total gross cash proceeds of $2.58 billion after the sale of its remaining stake.

The deal represents a significant value realisation for Olam Group’s shareholders as the total divestment including the initial sale of 35.43% stake in 2022, would raise total gross proceeds of $3.87 billion, accreting a total gain of $2.72 billion to the equity reserves of the Group.

New Growth Avenues                     

Olam Group’s co-founder and Group CEO Sunny Verghese said that since SALIC’s investment in Olam Agribusiness in 2022, their partnership with SALIC has unveiled new avenues of growth.

He said that with its strategic mandate as a global agrifoods’ investor and related complementary strengths, SALIC and Olam Agri share the same vision and focus on sustainable sourcing and commitment to meet the rising demand for food, feed and fibre. Importantly, this transaction is transformative for Olam Agribusiness.

“The deal marks another key milestone in Olam’s re-organisation journey announced in January 2020. With this transaction, we can now focus our attention on seeking strategic options to unlock value for the Remaining Olam Group businesses and Olam Food Ingredients (ofi), including the pursuit of an ofi IPO.”

SALIC Group CEO Sulaiman AlRumaih said that the full acquisition of Olam Agribusiness aligns with SALIC’s strategic objectives of diversifying sources of essential commodities, strengthening supply chain integration, and enhancing logistical efficiency across its local and international investments. Furthermore, this acquisition underscores SALIC’s ambition to secure a key position in the global grains sector.

He added: “Olam Agri, a global player in trading essential commodities, aligns with SALIC’s strategic investment approach, which prioritises high-potential companies addressing future food security needs through innovation and integrated supply chains both locally and globally. We are confident that this partnership will contribute to achieving national and global objectives while continually enhancing production efficiency for the benefit of all stakeholders.”