Saudi Agricultural and Livestock Investment Company is to up its stake in Olam Agri Holdings, the agricultural products unit of Singapore’s Olam Group, to more than 80%.
The group, wholly owned as the food and agriculture investment arm of PIF, Saudi Arabia’s sovereign-wealth fund, has agreed to acquire another 44.58% stake of Olam Agri Holdings for $1.78bn.
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Olam Agri processes raw materials such as grains and rice to produce products including flour, pasta, semolina and animal feed.
Post the transaction, which is expected to close in the fourth quarter, state-owned Salic will control more than 80% of the agribusiness, according to a statement from Olam Group confirming the deal first touted in November.
The completion of the deal is contingent on shareholder and regulatory approvals.
The transaction values Olam Agri at $4bn, an increase from the $3.5bn valuation in December 2022, when Salic initially purchased a 35% stake for $1.24bn.
As per the agreement, Salic will also have the option to acquire the remaining 19.99% stake in Olam Agri three years after the completion of the first tranche.
The sale of the total 100% interest in Olam Agri will generate total proceeds of $3.9bn for Olam Group, contributing an additional $2.7bn to its equity reserves.
The funds raised from the transaction could be allocated towards debt reduction or potentially distributed as a special dividend, according to the statement.
Salic CEO Sulaiman AlRumaih said: “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.”
Olam Group will retain full ownership of the remainder of the group, including its ingredients business OFI.
The Singapore company said it will now shift its focus towards exploring strategic options to maximise value for its remaining businesses and ofi, including the potential IPO of OFI.
Previously, Olam Group had considered an IPO and demerger for Olam Agri but those plans were postponed. Since then, the company had been evaluating different strategic alternatives and received a takeover bid from Salic for the Olam Agri business unit in November.
