Olam Agri closes US$1.8B sale to Saudi as shares jump

SAUDI ARABIA = Singapore-listed Olam Group has completed the sale of a 44.58% stake in its agricultural products business, Olam Agri, for US$1.78 billion to Saudi Agricultural and Livestock Investment Company (Salic).

The deal, reported by the company in an exchange filing on Monday, values Olam Agri at US$4 billion and grants Salic an 80% controlling stake in the business.

Olam Group stated that the transaction will result in a gain of US$1.84 billion. It also confirmed plans to divest its remaining 19.99 percent stake in Olam Agri three years after the first phase of the sale, ultimately giving Salic full ownership of the unit.

The company said that including a 35.43 percent stake sold to Salic in December 2022, the total proceeds from the divestment will amount to US$3.87 billion.

“With this transaction, we can now focus our attention on seeking strategic options to unlock value for the remaining Olam Group businesses and Ofi, including the pursuit of an Ofi IPO,”  Sunny Verghese, group chief executive said.

Olam Agri is a key unit of Olam Group, supplying grains, seeds, edible oils, and pasta.

The business was formed during a reorganization in early 2020, and the Persian Gulf region has emerged as an important market for its commodities.

According to industry analysts, Saudi Arabia has been making significant investments in food security, aligning with its long-term economic diversification goals.

Olam Group also announced plans to list its ingredients business, Ofi, on the premium segment of the London Stock Exchange with a secondary listing in Singapore.

The move is expected to enhance the company’s access to global investors and improve its market valuation.

Following the announcement of the stake sale, shares in Olam Group surged by 8.9 percent in early trading on Monday, reaching S$1.23.

This marked the company’s largest single-day gain since November last year.

 “Investor confidence has clearly been bolstered by the clarity and capital unlocked from this transaction,” a market analyst commented.

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