Singapore-based agri-food company Olam Group has received a takeover offer from Saudi Agricultural and Livestock Investment Company (SALIC) for its Olam Agri business unit.
The non-binding indicative offer (NBIO) is said to be under review, with no definitive terms or formal legal documentation established so far, the company said its statement.
Olam Group did not disclose the financial terms of the prospective deal.
While discussions on the latest acqusition deal underway, Olam Group indicated that the sale of the Olam Agri stake is not guaranteed.
In December 2022, SALIC International Investment Company acquired a 35.43% stake in Olam Agri for $1.24bn.
Olam previously planned to spin-off Olam Agri through an initial public offering (IPO) and demerger, on recipt of shareholder approval and meeting market conditions.
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By GlobalData
The spin-off was aimed at enabling Olam’s key business groups – OFI, Olam Agri, and the remaining group – to concentrate on their core operations.
This divestiture was also expected to “provide shareholders with more flexibility for the diversification of their investments in accordance with their individual risk appetites and investment preferences,” the company’s statement read.
Following a delay in the Olam Agri IPO, Olam announced it would also explore other strategic alternatives alongside the potential sale.
Olam Group operates globally in the food and agri-business sector, serving 22,000 customers across over 60 countries.
In the first half of 2024, the company’s revenue increased by 9.1% year-on-year to S$26.9bn ($20.41bn), driven by higher sales volumes.
Earnings before interest and taxes (EBIT) rose by 8.3% to S$888m, with significant contributions from ofi.
Olam Agri’s EBIT dropped by 8.4% to S$512m compared to a “strong” first half of 2023, although its Food & Feed – Processing & Value-Added segment “continued growth”.
In April 2021, Olam expanded its presence in the US food market by acquiring Olde Thompson, a spices and seasonings company, for $950m, following its $108.5m purchase of Japan-based Mizkan Group’s chili and spicy sauces division.
Earlier in 2020, Olam had announced a restructuring into two new business units, hinting at a potential divestiture and IPO as part of its growth strategy.
