Olam Group announced on Feb 24 that it will sell its remaining 64.57% stake in Olam Agri to Saudi Agriculture & Livestock Investment Company (SALIC), a state-owned Saudi investment firm.
The group will first sell its 44.58% stake — or 1.51 billion shares — SALIC for around US$1.78 billion ($2.35 billion), which will see SALIC owning a controlling stake of 80.01% in Olam Agri.
The sale puts Olam Agri’s implied 100% equity valuation at US$4 billion and represents a 14% premium to the US$3.5 billion valuation when SALIC first acquired a 35.43% stake in Olam Agri in December 2022 for U$1.29 billion.
After the completion of the 44.58% stake sale, Olam Group has the option to sell its remaining 19.99% stake in Olam Agri to SALIC three years later.
The put option to sell is exercisable at a base consideration of US$799.6 million, an amount of additional consideration equal to US$197,162 per day multiplied by the number of days from and including June 1 up to the completion date of the agreement.
The amount should also include a 6% internal rate of return (IRR).
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According to Olam Group, the implied 100% equity valuation for Olam Agri is 23% higher than Olam Group’s market capitalisation of US$3.25 billion. The group currently consists of Olam Agri, ofi and the remainder of the group.
Upon the completion of the 44.58% sale, Olam Group will realise an estimated gain on disposal of US$1.84 billion. The latest valuation represents a 3.47 times P/B multiple to Olam Agri’s book value of US$1.15 billion
Olam Group first proposed the demerger of Olam Agri in March 2023, where it had been working towards the latter’s IPO on the Mainboard of the Singapore Exchange . The group was also exploring a possible listing of Olam Agri on the Saudi Arabia Stock Exchange at the same time.
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The group then announced the delay of the IPO and demerger in May 30 saying the necessary regulatory approvals had yet to be obtained.
Olam Group had previously received a non-binding offer from SALIC in November 2024 that valued Olam Agri Holdings at around US$4 billion.
Shares in Olam closed 1 cent lower, or 0.88% down, at $1.13 on Feb 21.
