In a landmark development, the Saudi Agricultural and Livestock Investment Company (SALIC) is set to acquire a 44.58 percent stake in Olam Agri for $1.78 billion, marking the first tranche of a deal that will culminate in SALIC holding a controlling 80.01 percent stake in Olam Agri. The transaction, announced in a joint statement, underscores SALIC’s strategic interest in strengthening global food security and its growing presence in essential commodity markets.
Thank you for reading this post, don't forget to subscribe!Following the completion of the first tranche, Singapore’s Olam Group Limited will have a put option to sell its remaining 19.99 percent stake in Olam Agri to SALIC in a second tranche, which is exercisable three years after the completion of tranche one. A call option will also be available for SALIC to buy the remaining shares before the third anniversary of the first tranche’s closure.
The $4 billion implied valuation of Olam Agri is a 23 percent premium over Olam Group’s market capitalization of $3.25 billion and reflects a 14 percent increase from SALIC’s initial $1.29 billion investment in December 2022 for a 35.43 percent stake. This move further solidifies SALIC’s investment strategy, focusing on long-term sustainability and addressing global food security challenges through integrated supply chains.
Olam Group, upon completing this sale, is expected to realize an estimated gain of $1.84 billion, which will be added to its equity reserves. With a projected total gross cash proceeds of $2.58 billion from both tranches, Olam plans to assess the future use of these proceeds, including debt repayment and potential special dividend distributions.
This acquisition aligns with SALIC’s broader objective of securing a prominent position in the global grains sector and enhancing the efficiency of its supply chain operations. Commenting on the deal, Olam Group CEO Sunny Verghese emphasized the transformative nature of the transaction for Olam Agri, which is part of the company’s ongoing restructuring to focus on strategic growth opportunities and explore options for an Initial Public Offering (IPO) for its Olam Food Ingredients (ofi) division.
Sulaiman AlRumaih, SALIC’s Group Chief Executive, expressed confidence that this acquisition will strengthen the company’s role in the global agrifood sector, with a shared vision for sustainable sourcing and growth in response to rising food, feed, and fiber demand. The deal is seen as a key step in enhancing SALIC’s capacity to diversify its essential commodity sources, boost logistical efficiencies, and meet the global food security challenge.
