The Olam Group plans to sell a 44.58% stake in Olam Agri to Salic, the food and agriculture investment arm of Public Investment Fund of the Kingdom of Saudi Arabia, for approximately US$1.78 billion, at an implied 100% equity valuation for Olam Agri of US$4 billion.

Salic already owns 35.4% of the unit and will acquire 64.6% of Olam Agri in two tranches.

Initially, Salic will buy 44.6% of Olam Agri for US$1.78 billion, bringing its shareholding to 80%. It then has an option (Trache 2) to acquire the remaining 20% of the company within three years.

Hailed as a “transformative deal,” Olam says it represents a significant value realization for Group shareholders:

Olam Group’s divestment of a 100% interest in Olam Agri at the end of Tranche 2, including the initial sale of a 35.43% stake in 2022, would raise total gross proceeds of US$3.87 billion, accreting a total gain of US$2.72 billion to the group’s equity reserves.

Olam sells agribusiness unit

Upon the completion of the sale, Olam Group Limited will have the option to sell its remaining 19.99% stake in Olam Agri to Salic.

“Since Salic’s investment in Olam Agri in 2022, our partnership with Salic has unveiled new avenues of growth. With its strategic mandate as a global agrifoods investor and related complementary strengths, Salic and Olam Agri share the same vision and focus on sustainable sourcing and commitment to meet the rising demand for food, feed and fiber. importantly, this transaction is transformative for Olam Agri,” says OGL’s co-founder and Group CEO, Sunny Verghese.

“The sale of Olam Agri to Salic marks another key milestone in Olam’s reorganization journey announced in January 2020. With this transaction, we can now focus our attention on seeking strategic options to unlock value for the remaining Olam Group businesses and ofi, including the pursuit of an ofi IPO.”

Olam’s reorganization

Olam Agri was formed when Olam was reorganized in 2020. The agri unit produces grains, edible oils, rice, and cotton. Meanwhile, Olam Food Ingredients, which operates the group’s cocoa, coffee, edible nuts, spices, and dairy businesses, has been seeking a listing on the London Stock Exchange since the company’s reorganization.

Group CEO of Salic, Sulaiman AlRumaih, adds: “The full acquisition agreement of Olam Agri aligns with Salic’s strategic objectives of diversifying sources of essential commodities, strengthening supply chain integration, and enhancing logistical efficiency across its local and international investments. Furthermore, this acquisition underscores Salic’s ambition to secure a key position in the global grains sector.”

“Olam Agri, a global player in trading essential commodities, aligns with Salic’s strategic investment approach, which prioritizes high-potential companies addressing future food security needs through innovation and integrated supply chains both locally and globally. We are confident that this partnership will contribute to achieving national and global objectives while continually enhancing production efficiency for the benefit of all stakeholders.”

The transaction is expected to be completed in the fourth quarter of this year.