Olam Group Limited (“OGL”) today announced the proposed sale of its remaining 64.57% stake in Olam Agri Holdings (“Olam Agri”) to Saudi Agriculture & Livestock Investment Company (“SALIC”) in a transaction valued at approximately US$1.78 billion. This deal, which represents a significant step in Olam’s strategic re-organisation, is expected to create substantial value for OGL shareholders.
Under the terms of the agreement, SALIC will acquire a 44.58% stake in Olam Agri for approximately US$1.78 billion (S$2.35 billion), implying a 100% equity valuation of US$4.00 billion for Olam Agri. Upon completion of this transaction (“Tranche 1”), SALIC will own a controlling 80.01% stake in Olam Agri.
Olam Group will retain a 19.99% stake in Olam Agri, with the option to sell this remaining interest (“Tranche 2”) to SALIC at the Closing Valuation plus a 6% internal rate of return (IRR) on the third anniversary of the Tranche 1 completion. Concurrently, SALIC will also have the option to acquire the 19.99% stake within the same period.
Key Highlights of the Transaction:
- The 100% equity valuation of US$4.00 billion represents a 14% premium to the US$3.50 billion valuation at which SALIC first acquired a 35.43% stake in Olam Agri in December 2022.
- The valuation reflects a 3.47x price-to-book multiple based on Olam Agri’s book value of US$1.15 billion as of December 31, 2023.
- OGL is expected to realise an estimated gain of US$1.84 billion (S$2.43 billion) from the sale of Tranche 1, which will contribute to OGL’s equity reserves.
- The total gross cash proceeds from the sale of both tranches are estimated at US$2.58 billion (S$3.41 billion).
- Following the full divestment of Olam Agri, including the initial 35.43% stake sale in 2022, OGL will have raised total gross proceeds of US$3.87 billion (S$5.11 billion), with a total gain of US$2.72 billion (S$3.59 billion) accruing to the Group’s equity reserves.
Olam Group will carefully evaluate the use of proceeds, considering factors such as earnings, cash flow, capital requirements for growth, and general business conditions. Potential allocations may include debt repayment, capital restructuring, and the provision of a one-time special dividend distribution to shareholders.
Sunny Verghese, Co-Founder and Group CEO, Olam Group:
“Since SALIC’s investment in Olam Agri in 2022, our partnership has unlocked new avenues for growth. With its global agrifood investment mandate and complementary strengths, SALIC aligns with Olam Agri’s vision of sustainable sourcing and meeting the rising global demand for food, feed, and fibre. This transaction is transformative for Olam Agri, strengthening its long-term strategic position.
“The sale of Olam Agri to SALIC marks another key milestone in Olam’s re-organisation journey announced in January 2020. With this transaction, we can now focus on exploring strategic options to unlock value for the Remaining Olam Group businesses and ofi, including pursuing an IPO for ofi.”
Looking Ahead
With the completion of this transaction, Olam Group will continue to own 100% of ofi (Olam Food Ingredients) and the Remaining Olam Group businesses. The company will now turn its attention to identifying strategic opportunities to unlock further value, including a potential public listing of ofi.
The transaction is subject to customary regulatory approvals and closing conditions, with completion expected in due course.
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