Singapore Exchange-listed Olam Group, which is a leading food and agri-business firm, has agreed to sell 35.4 percent of its stake in Olam Agri to the Public Investment Fund (PIF)-owned Saudi Agricultural and Livestock Investment Co (SALIC) for $1.24 billion.
Olam Agri is one of three operating units formed in a reorganisation announced by Olam Group in early 2020. Meanwhile, Saudi Arabia’s SALIC invests both domestically and overseas in its aims to achieve food security for the kingdom.
The deal, which Olam Agri said completed one of the key milestones of its re-organisation, will give the firm an implied equity valuation of $3.5 billion subject to closing adjustments.
Singapore-headquartered Olam Group will retain a 64.6 percent holding in the unit following the sale, and the proceeds will go toward “right-sizing” the firm’s capital structure and reducing its leverage, the firm said in the filing.
The announcement comes a day after Olam delayed a London listing of its food unit – Olam Food Ingredients – due to the war in Ukraine.
The partnership with SALIC “delivers synergies and strengthens access to the kingdom of Saudi Arabia’s market and the broader Middle Eastern region,” Olam Group’s co-founder and group chief executive officer Sunny Verghese said during a virtual briefing.
Saudi Arabia imports 75 percent of the food it needs, including 7 million tonnes of barley and 3 million tonnes of corn every year.
The deal, which is expected to be completed by the end of this year, is subject to shareholder approval, Olam said in the filing.
Rothschild & Co. and Credit Suisse Group AG are the financial advisers to Olam, while Goldman Sachs Group Inc. is the exclusive financial adviser to SALIC.
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