Bloomberg | 31 October 2024Saudi Arabia nears deal to take over $4 billion Olam unit
By Matthew Martin, Dinesh Nair, and Isis Almeida
Olam Group Ltd. received a non-binding offer from a state-owned Saudi investment firm for its agribusiness unit, according to a statement Friday, confirming an earlier Bloomberg News report.
“The company is reviewing and in discussions regarding a potential sale of its stake in the Olam Agri business,” Olam said. “No definitive terms or formal legal documentation have been agreed upon.”
Citing people familiar with the matter, Bloomberg had reported that Saudi Agricultural & Livestock Investment Co., controlled by the country’s sovereign wealth fund, was in advanced talks on a transaction that would value Olam Agri Holdings at about $4 billion.
The Saudi firm already owns just over a third of of Olam Agri, which it bought for $1.24 billion in 2022. Salic is a unit of the Public Investment Fund and aims to achieve food security for the kingdom, investing domestically and overseas.
Olam shares jumped as much as 11% in Singapore prior to the company’s statement Friday, the biggest intraday gain since Feb. 19.
Olam had been working on a potential listing of the agribusiness unit in Singapore and Riyadh last year, though the share sale preparations later stalled, according to the people, who asked not to be identified because the information was private.
A representative for Salic declined to comment.
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 in a reorganization in early 2020. The Gulf region is a growing market for the commodities it supplies and Saudi Arabia is putting a strong emphasis on food security.
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Interfax | 1 November 2024
MOSCOW. Nov 1 (Interfax) - The Saudi Arabian company Salic (Saudi Agricultural & Livestock Investment Co.) will gain control over a number of Russian agricultural assets through its purchase of Singapore's Olam Agri, the Union of Grain Exporters and Producers said when commenting on information in foreign media about Olam Group receiving a proposal from Salic to acquire its agricultural division.
The union is referring in particular to the Azov Grain Terminal. Olam is a member of the union via the Azov terminal.
Salic currently owns 35.4% of Olam Agri following a deal concluded in 2022 worth $1.24 billion.
"Without exaggeration, [this is] a landmark deal which opens the door to the Russian agricultural market for Saudi Arabia. By acquiring Olam Agri, the Saudis gain control over the shallow-water grain terminal in Azov, and possibly the company Rusmolko, one of the biggest milk producers in Russia which includes three dairy complexes and a herd breeding complex in the Penza region with a livestock population of more than 33,000 head, as well as 152,000 ha of agricultural land. The company has established a closed cycle that includes production, storage and processing of grain," union board chairman Eduard Zernin said.
Salic has been actively seeking out investment opportunities in the Russian agricultural sector in the past few years, Zernin told Interfax. "Now after buying Olam Agri, we can say that the Saudis are entering our market. It's difficult to overestimate the importance of this event for Russian agriculture, especially in light of the recent geopolitical risks," he said.
At the same time, Rusmolko is not part of Olam Agri and is not included in the scope of the deal, Rusmolko told Interfax. Rusmolko is part of Olam Global Holdings. The deal concerns only the business of the Azov Grain Terminal, the company said.
The purchase price for the remaining part of Olam Agri is estimated at $4 billion. It will enable Salic to gain full control over Olam Agri's commodity portfolio, which includes grain, edible oils and other food products.
The Azov Grain Terminal has a capacity of up to 1.4 million tonnes of grain per year. According to its financial statements, revenue in 2023 amounted to 13.457 billion rubles, compared to 13.435 billion rubles in 2022, with net profit at 142.99 million rubles versus 361.5 million rubles, respectively.
