(Reuters) -Saudi Arabia’s agricultural and livestock investment firm SALIC has agreed to buy a 44.58% stake in Singapore-based Olam Group’s agricultural products business Olam for 1.78 billion, the companies said on Monday.
Shares in Olam Group jumped as much as 8.9% in early trading to S$1.23, their biggest daily jump since November last year.
The transaction values Olam Agri at $4 billion, higher than the $3.5 billion valuation in December 2022 when it sold a 35% stake to SALIC, and will give SALIC an 80% controlling stake in the business.
Saudi Arabia’s sovereign wealth fund, the $925 billion Public Investment Fund (PIF), owns SALIC.
The deal underscores the kingdom’s drive to prioritise secure food supply chains and rely less on imports.
Gulf Cooperation Council (GCC) countries import up to 85% of their food, including the majority of staples such as rice and cereals, according to PwC. Abu Dhabi holding firm ADQ in 2021 also bought a 45% stake in Louis Drefus Company in a similar move.
Olam Group, which was advised by Rothschild on the deal, will divest its remaining 19.99% stake in the unit three years after the completion of the first phase, giving SALIC full control of Olam Agri, it said.
The deal will result in a gain of $1.84 billion for Olam Group, the firm said in an exchange filing.
Including the 35.43% stake sold to SALIC in December 2022, Olam Group will unlock $3.87 billion in gross proceeds from the complete divestment of Olam Agri.
“The full acquisition agreement of Olam Agri aligns with SALIC’s strategic objectives of diversifying sources of essential commodities … to secure a key position in the global grains sector,” SALIC Group CEO Sulaiman AlRumaih said in a statement.
Olam Group, which is also planning to list its ingredients business, ofi, on the premium segment of the London Stock Exchange alongside a secondary listing in Singapore, said it can now focus on ways to unlock value for the remaining businesses.
“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 IPO,” Group CEO Sunny Verghese said.
(Reporting by Sameer Manekar and Rishav Chatterjee in Bengaluru; and Amy-Jo Crowley in London. Editing by Will Dunham, Sam Holmes, Varun H K and Louise Heavens)
