Singapore-listed Olam Group to sell 44.6% stake in agribusiness to Saudi fund for $1.78bn

Singapore-listed Olam Group’s share price jumped after one of the world’s biggest cocoa and coffee merchants announced a deal to sell its agribusiness unit to a state-owned Saudi Arabian investment firm. 

According to a report by Reuter, Olam Group on Feb 24 said it will sell a 44.6 per cent stake in Olam Agri for US$1.78 billion (S$2.35 billion) to Saudi Agricultural and Livestock Investment Company (Salic).

Salic, a unit of Saudi Arabia’s sovereign wealth fund, already holds about 35.4 per cent of Olam Agri.

The transaction values Olam Agri at US$4 billion, higher than the US$3.5 billion valued at the transaction in December 2022 when it sold the 35.4 per cent stake, and will give Salic an 80 per cent controlling stake in the business.

It will result in a gain of US$1.84 billion for Olam Group, the firm said in an exchange filing on Feb 24.

Olam Group will divest its remaining 19.99 per cent stake in the unit three years after the completion of the first phase, giving Salic full control of Olam Agri, it said.

Including the 35.43 per cent stake sold to Salic in December 2022, Olam Group will unlock US$3.87 billion in gross proceeds from the complete divestment of Olam Agri.

Shares of Olam Group jumped as much as 8.9 per cent in early trading on Feb 24 to $1.23, their highest level since Jan 6.

Olam Group, which is also planning to list its ingredients business, ofi, on the premium segment of the London Stock Exchange alongside a secondary listing in Singapore, said it can now focus on ways to unlock value for the remaining businesses.

“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,” Group group chief executive Sunny Verghese said.

Olam Agri, which sells grains and seeds and makes everything from edible oils to pasta, is one of Olam’s main units. It was created during a reorganiaation in early 2020. The Persian Gulf region is a growing market for the commodities that Olam supplies and Saudi Arabia has placed a strong emphasis on food security.

“The full acquisition agreement of Olam Agri aligns with Salic’s strategic objectives of diversifying sources of essential commodities … to secure a key position in the global grains sector,” Salic Group CEO Sulaiman AlRumaih said in a statement.