Singapore-based agri-food company Olam Group has received a takeover proposal from the Saudi Agricultural and Livestock Investment Company (SALIC) for its Olam Agri division. This offer, described as a non-binding indicative offer (NBIO), is currently under evaluation. Olam Group has not yet established definite terms or formal legal documentation regarding this potential acquisition.
In its statement, Olam Group chose not to disclose the financial details related to the proposed transaction. While negotiations are ongoing, the company has noted that the sale of its Olam Agri stake remains uncertain.
It’s noteworthy that in December 2022, SALIC International Investment Company acquired a 35.43% stake in Olam Agri for $1.24 billion. Initially, Olam had intended to spin off Olam Agri through an initial public offering (IPO) and demerger, contingent on shareholder approval and meeting market conditions.
This spin-off aimed to enable Olam’s key business groups—Olam Food Ingredients (OFI), Olam Agri, and the remaining group—to focus on their respective core operations. The divestiture was expected to provide shareholders greater flexibility in diversifying their investments, aligning with their individual risk profiles and investment preferences.
Due to delays surrounding the Olam Agri IPO, Olam Group announced it would examine other strategic alternatives along with the potential sale. Olam operates on a global scale within the food and beverage industry, serving approximately 22,000 customers across more than 60 countries.
In the first half of 2024, Olam’s revenue grew by 9.1% year-on-year, reaching S$26.9 billion ($20.41 billion), driven primarily by increased sales volumes. The company recorded an 8.3% ascent in earnings before interest and taxes (EBIT), amounting to S$888 million, significantly supported by contributions from OFI.
However, Olam Agri’s EBIT saw an 8.4% decline to S$512 million compared to a robust first half of 2023. Yet, its Food & Feed – Processing & Value-Added segment continued to exhibit growth.
In April 2021, Olam advanced its footprint in the U.S. food market by acquiring Olde Thompson, a spices and seasonings company, for $950 million. This came after its previous purchase of Mizkan Group’s chili and spicy sauces division for $108.5 million.
Earlier in 2020, Olam had revealed plans to restructure into two new business units, signaling a possible divestiture and IPO as part of its growth strategy focused on the dynamic landscape of the food and drink business, reflecting the evolving food and drink consumer trends.
As Olam Group navigates this potential acquisition, the food and beverage industry trends remain pivotal in shaping its strategic decisions.
