Saudi Company Set to Own Major Stake in Olam Agri After $1.78bn Acquisition Deal
- Olam Group Limited is divesting another 44.58% stakes from its subsidiary, Olam Group, to SALIC
- This is a multi-billion dollar acquisition deal which will eventually transfer 100 per cent equity to SALIC
- Olam Group Co-founder says the new move aligns with its restructuring journey and will allow it to refocus its efforts
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Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.
Olam Agri is set to have a new owner after the Saudi Agriculture and Livestock Investment Company (SALIC) acquires 44.58% stakes in $1.78 billion.
In addition to earlier shares acquired, SALIC would own 80.01% shareholding in Olam Agri when this deal is completed, leaving Olam Group Limited with less than 20% stakes.
This new deal was announced in a joint statement signed by both companies.
Source: Getty Images
The second tranche of this deal will present the Olam Group Limited with the option of selling its 19.99% stakes in the company to SALIC.
This option may be exercised on or before the third anniversary after completing the first tranche, and at the Closing Valuation plus 6% IRR, This Day reports.
Olam Group to refocus after acquisition deal
The implied 100% equity valuation in this deal is about $4 billion, roughly 23% more than the current $3.25 billion market capitalisation of Olam Group Limited (OGL), which includes Olam Agri, and the remaining Olam Group.
It is also 14% more than the $3.50 billion valuation at which SALIC made the first acquisition of 35.43% in December 2022.
For Olam Group Limited, the deal means divesting 100% stakes in Olam Agri at the end of the second tranche and raising total gross proceeds of $3.87 billion, and a total gain of $2.72 billion into its equity reserves.
The group still has its remaining subsidiaries where it holds 100% stakes and can continue to unlock more value for shareholders.
In a statement about the deal, Sunny Verghese, the Co-founder and Group CEO of Olam Group Limited, said that both companies share the same vision of using sustainable sources to meet the rising global demand for food, fibre, and feed.
Source: Original
Recall that Olam Agri is one of the world’s leading commodity trading and processing companies specializing in grains, oilseeds, rice, and animal feed, with thousands of employees across 30 countries.
He added that the deal will allow Olam Group to further its reorganization journey which it started in January 2020, and to focus its attention on unlocking value for the remaining Olam Group businesses.
Saudi agriculture company speaks on acquisition
SALIC Group CEO, Sulaiman AlRumaih observed that the acquisition aligns with the group's objectives to diversify its sources of essential commodities and strengthen the supply chain integration across its investments.
It will also position it as a new giant player in trading essential agricultural products in the grains sector.
It also aligns with its investment approach to partner with high-potential companies that are focused on addressing global food demands, by integrating local and global supply chains.
Olam Group sells affordable rice to Nigerians
In related news, a survey showed that Olam Group sells one of the most affordable rice for consumption to Nigerians.
According to the report, Mama's Choice, a premium rice brand owned by Olam group retails between N87,000 and N90,000 for a 50kg bag.
Other brands like Big Bull, Royal Stallion, and Mama Gold are also among the preferred Nigerian brands for their unique quality and fair pricing.
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Source: Legit.ng
